12 May How Close is Zillow to Pricing Your Home Right?
By Jay Gates –
Have you ever Zillow’d yourself? It is like googling yourself but substitute your home’s address to get the zestimate of what it is “worth”. If my clients relied on the Zestimate to list their home they could potentially miss out on a substantial amount of money. For example; 6335 Birchdale Ct. in Anderson Twp, Ohio:
“A beautifully maintained Tri-level on a Cul-De-Sac street. Enjoy skylights, newly remodeled master bath and a kitchen with a walkout patio. Lovely wooded private back yard with mature trees. New HVAC 2015, part of the Forest Hills School District and easy access to downtown and 275.”
The Zestimate is $161,702 we listed at $164,900 and sold it the first day for $167,900 with no closing costs in a multiple offer bidding war. Zillow can estimate a value but there is more to it than an algorithm of neighborhood sales. The key to selling your house comes down to price. The adage that something is only worth what someone is willing to pay it rooted in real estate. As agents it is our job to help you price it right. In order to determine the price we need to determine the value which is not the same.
LOCATION – LOCATION – LOCATION
There are three main factors that determine value. I could use another adage “Location, location, location”. But for today we will use Location, condition and comparable sales. We will not use close to, kind of like, I need or I owe to determine value. As your real estate agent this is where I earn my money. Anyone can fill out a contract, snap some pics, upload it to the Internet and stick a sign in the front yard. My job is to do the homework and present you with solid facts, look at and visit other houses on the market in your area, analyze data so that you can get the highest price in the shortest amount of time. Location is the one thing you can’t change about a property. A couple of feet in any direction could change the view, school district, taxes, usability and other factors that figure into the value.
“Ooh that smell, can’t you smell that smell”
Condition can change. Previous values maybe irrelevant if owner neglected or improved the property since that previous value was set. Condition is a judgement and takes experience to compare and contrast different properties to factor into a value of the current property. Zillow can’t do this.
You have to go inside the competitions house, look at the quality of the finishes, wear and tear, pet odors and damage, high way noise and other issues you have to see, touch, and smell. Then go back to your house and be honest with where your house rates.
One of these houses is not like the others
Comparable sales are finding like houses, in like areas, with like features to determine what other houses have sold for in recent months. Then extrapolating some of the differences that may raise or lower the input into the value equation. Here Zillow is able to contribute a little more than above. Basically sifting through all the data giving us the cold hard facts of what other similar properties have sold for in recent history. Zillow would be a trailing indicator of value. An experienced agent should be more up to date with the market and a better indicator of current value.
“Come on down you are the next contestant on the Price is Right”
Zillow’s “Zestimate” is only a guess of the value base on an algorithm it may be too high or too low. Once we have a value we can work on the price. Price is what our best guess of what we think something of this value should sell for in a given amount of time. When setting the price we want to ignore what is owed, what it was originally purchased for or what it appraised for some time in the past. What we want to focus on is how fast do I need to sell it? In a hot market maybe we go in the higher end of value and listen to the market and react accordingly. In a slower market we may have to lean the other way if we can’t wait for the right buyer. Price is constantly in play, as a seller you generally can’t raise the price so you want to get it right the first time. If your house sells in a day or week at list price or close, chances are you have won “the price is right” and are on your way while the other contestants (homes for sale) are wondering why there house continues to sit. Don’t second guess yourself that you sold to cheap. Thank your agent and refer him to all you neighbors and friends that need a partner to help them to be the next winner of the “Price is Right”