House Values and Zestimates
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Today we are talking about Zestimates and other automated home values. Specifically for Zestimates, I have noticed the following lately:
First, they are much lower than what houses are actually selling for. This is an automated algorithm. It isn't looking at the current market and the demand with multiple offers being made on houses. Typically algorithms use sold prices, which is still low in today's market. What is sold today is a lower price than what is going under contract today. When we evaluate prices for listing or purchasing, we take what has sold and have to bump it up a little to match today's market.
Second, Zillow is their own buyer and it has me wondering if they are valuing houses lower to give themselves the opportunity to buy low. Keep in mind, this is my own observation and my own thoughts. I have no fact to base this on.
Third, when a house goes on the market the value changes from what was listed the day before when it was off the market. You would think that if they thought this was the value, it would stay the same, regardless of what the owner and the agent decided to list the house at. We have seen it change tens of thousands of dollars from off market to on market. Again, as mentioned before, the Zestimate is typically lower now than what the house will actually accept a contract and sell for. This is not an accurate account of the current sales environment. As a buyer you can't use this amount as your starting point for an offer. If you like the house you will most likely not get it at that price.
These are just my own opinions and observations after looking at so many houses and having clients compare them to these automated home value sites. If you have any questions or want to know what we think the value of your home is in today's market conditions, please reach out to us.