Coldwell Banker has created a great presentation tool that takes selected homes and compares Zillow estimates to final sales price. The variances can be big and I like to use it to help my clients understand that a detailed Market Analysis or Appraisal are the only way to truly price a home. In a recent presentation for a million dollar home, the sales I chose were between $100,000 and $200,000 off from the Zestimate. That variance can really impact the ability to sell your home.
Karen Belita a data scientist from the National Association of Realtors. says that Automated Valuation Models are based on computer algorithms and calculations that take different sets of property data and look for patterns and relationships between property value and the input data. If you had a 2 bedroom, 2 bathroom home, data might be pulled from condo and town houses and might not recognize that the 2/2 is actually a single family residence. The algorithms do not take into account the unique qualities of a property, neighborhood or market. It can't tell if a home has been remodeled nor can it tell if you have a stunning ocean view. Agents know the location, the homes they are comparing and they visit the properties to determine condition. In addition, appraisals use comparative market analyses and in-depth expertise of real estate professionals to draw a conclusion on the value of the property.
If you need to sell your home, pricing right is essential so focus on comps not on the estimates!
Source: “Online Home Value Estimates Are Not Appraisals,” National Association of REALTORS® Economists’ Outlook blog (June 29, 2017)