When it comes to determining the sale price of your home, there’s a sweet spot somewhere between starting too low and pricing too high that will look just right for buyers, but that will also ensure you’re getting the most out of your investment. Determining the Fair Market Value of your property and listing appropriately will save you time and money, and the internet abounds with websites like Zillow.com, which seem to take the guesswork out of coming up with a price by offering you an estimate of your current value. How reliable are “Zestimates” when it comes to your home’s value, and can you expect to pull in the “Zillow” price?
Zillow is an online real estate database company founded in 2006 by former Microsoft and Expedia executives Lloyd Frink and Rich Barton. Estimating the values of over 110 million homes nationwide is no small feat, and the company utilizes a complex automated valuation model (AVM) that uses advanced algorithms to analyze data to determine “relationships.” Home characteristics like the geographic area, square footage, and number of bedrooms or bathrooms are given different “values,” and when compared with recent sales data, property tax assessments, and prior or current transactions of similar homes, Zillow provides a guess or “Zestimate” of your home’s value. Unfortunately, the algorithms only get to within about 5% of the homes actual value about 50% of the time.
In 2010, McEnearny Associates analyzed the sales of 500 properties that were scheduled to close over the course of a week’s time, to compare the “Zestimate” on the website with the actual closing sale price. In half the cases, the prices listed on Zillow were off on the value of the home by 5%, a difference of about $14,000 on average. Setting your sale price based on inaccurate information can lead to quite a difference in what you can expect to come away with. Why the disparity? Unfortunately, an AVM algorithm just doesn’t have the capability of quantifying intricacies that determine a sale, like the value of a recently remodeled kitchen, architectural character, or of considering a poorly maintained structure or yard. The site itself explains just that; a “Zestimate” is a starting point of determining the price, not an appraisal of your home value.
Finding the right list price for your home is one of the most important factors in getting it sold. When you list at a price lower than the value, you could sacrifice some of the equity that’s developed in your ownership. Homes listed too high present another set of issues. You may find a buyer willing to purchase at the list price, but when the lending bank orders an appraisal of the property, it could come up short and leave buyers with the task of coming up with the difference. Also, you could end up with a property that sits on the market for weeks and even months. Not only will this result in price drops anyway, but any future buyers will assume that there’s something undesirable about the house or that you’re desperate to sell.
Real Estate markets can change from week to week and from neighborhood to neighborhood, so having a working understanding of your home’s value to buyers can be one of the most important steps you take toward a successful sale. If you’re interested in learning more about a quick and honest transaction for your home, contact the experienced professionals at Win Win Fast Property Solutions today. We look forward to helping you!