AgentOwned Realty
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What is the Zestimate?

Posted By: Greg Gelber In: Buyers Information
Date: Thu, Jun 16th 2016 9:21 pm

Zillow is one of the most popular real estate websites out there. Its creators were also the founders of the online travel website Expedia. Zillow provides heaps of guidance ranging anywhere from potential rental incomes to interior design budgeting. They’ve made the buying/selling process significantly more transparent with the vast amount of data and information easily accessible on their website. They use the data compiled to come up with their estimate of a homes value using an automated valuation model. This number is called the Zestimate and is not an accurate representation of what your home will actually sell for. There are three main categories of data that are pulled to calculate the Zestimate, shown below (pulled from zillow.com).

Physical attributes: Location, lot size, square footage, number of bedrooms and bathrooms and many other details.

Tax assessments: Property tax information, actual property taxes paid, exceptions to tax assessments and other information provided in the tax assessors’ records.

Prior and current transactions: Actual sale prices over time of the home itself and comparable recent sales of nearby homes.

The above information can provide a starting point when determining the value of your home but is missing some key components. For example, say there are two homes that are identical and sell for the same exact price. The bathrooms and kitchens are very outdated in both of the homes. One of the owners decides to leave the entire house as is whereas the other owner fully renovates the bathrooms and kitchen to include marble counter tops and stainless steel appliances. The Zestimates for the home with the outdated kitchen and bathrooms will most likely be the same as the one that underwent the complete renovation. With that being said, there are ways for homeowners to manually submit certain changes so Zillow can adjust the Zestimate accordingly.

To put this in perspective, I’ve randomly pulled a few of the homes that have sold on the Charleston Peninsula recently along with their Zestimates. As the numbers below show, there are huge discrepancies between the sold price and the Zestimate.

57 Bogard St

Sold - $250,000

Zestimate - $227,358

Difference - $22,642

24 Cleveland St

Sold - $438,000

Zestimate - $242,386

Difference - $196,114

11 West St Apt B

Sold - $340,000

Zestimate - $313,009

Difference - $26,991

254 Saint Phillip St

Sold - $490,000

Zestimate - $425,167

Difference - $64,833

105 E Bay St

Sold - $1,637,500

Zestimate - $2,025,236

Difference -$387,736

29 Poinsett St

Sold - $295,000

Zestimate - $89,959

Difference - $205,041

Zillow is an amazing tool that can give anyone with an internet connection a great deal of exposure to an industry that has previously kept it’s workings and knowledge to those within the field. I would recommend using it to educate yourself about the markets and idiosyncrasies of the buying and selling process. If you are trying to buy or sell a home, I would not rely on the Zestimates or rental income projections. Please reach out to me if you’d like assistance in determining the value of your home at 843-494-2354 or greg.gelber@agentownedrealty.com.