There’s an old adage in real estate “your home is only worth what someone is willing to pay for it.” This means that there are many factors, some subjective that go into the valuing of a home. But also know that even if you get an offer, if its not all cash, the appraisal may kill the sale.
In today’s online, instant access world, many home buyers look to Zillow, Realtor.com and Trulia for buying and selling information first. Gone are the days that buyers and sellers consult their real estate agent first. But the questions is, “Should I Trust Zillow to Determine My House Value in Stockton?”
The Real Answer is No.
You can’t trust Zillow or any other computer Algorithm for valuing your home. Think I am wrong?
Should I Trust Zillow to Determine My House Value in Stockton
Zillow has a Margin for Error
Zillow is known to be off anywhere from 18 to 20 percent higher or lower in home valuations for years. There are even reports of home values on Zillow climbing in declining market areas and declining in other markets that are booming.
Let’s think about this for a second. For a $200,000 home, a 20 percent deviation is $40,000. For higher-priced markets like San Francisco or San Jose, a $1 million home could see unrealistic estimations varying from $180,000 to $200,000 or more. That’s a huge discrepancy in pricing.
So What About Stockton?
For Stockton, Zillow is no different. While Stockton has seen a resurgence in real estate prices and home sales with values that continue to outpace other central valley cities, Zillow still cant tell the difference between one neighborhood and another.
Zillow estimates have discouraged potential buyers who might think a home is well out of their price range while giving sellers an unrealistic target selling price point. In the end, this is the starting point of many disagreements homeowners are having with their real estate agents regarding properly pricing a home.
But you cant take the real estate agents data as the gospel either. Many real estate agents leave a lot of your money on the table when they price a house, because an unsold house earns no one a commission. Real Estate Agents notoriously price homes low to sell fast. The best and most accurate way to arrive at a reliable value is to have the house appraised by a certified appraiser.
Simply put: homeowners see the price on Zillow and think that is the starting point for their home.
How Does Zillow Create Estimates
Zillow calls its proprietary software for estimating a “Zestimate.” Even with all the pricing factors placed into the formula, there is still a high margin of error because Zillow isn’t actually looking at your home and does not have access to all of the sales data in every city, county and state.
The computer algorithm at the county records of sales and market pricing in the area. It will factor in the size of the house, the lot and all features of the home including the number of bedrooms, bathrooms, pools and highlighted features. However, even Zillow will say this is a starting point for a true valuation of your home and should not be considered an appraisal or true value.
Here’s why: Zillow’s information is reliant on incomplete public records and user input such as realtor sales. But, Zillow cannot discern if your home is the dilapidated eyesore in the community or the completely redone and upgraded home everyone is envious of.
Additionally, Zillow can not discern specific neighborhoods within cities. So while a house within a quarter mile of the your house may be of the same square footage and age, it doesn’t take into consideration a privately gated community or a stately mansion. These are very common in larger cities where you can have a higher end housing development just blocks from a mid or lower-end one. These “pockets” can skew or be skewed by larger metro data that Zillow factors in that aren’t pertinent.
The More Accurate Model
The most accurate way to value a house is via an appraisal from a Certified Appraiser. Certified Appraisers charge any where between $350 and $550 to appraise a house and its considered the most trust worthy.
But even appraisers make mistakes and its not uncommon for banks to require 2 appraisals on certain FHA and VHA properties.
Any experienced real estate agent will tell you that pricing a home to sell requires a full understanding of the home itself, the location and current market conditions in that area. In fact, most realtors look at Zillow pricing with a bit of disdain because it does make pricing and managing realistic client expectation more difficult.
A realtor will create a competitive market analysis by looking at sales in the specific area, creating a geographic radius based on the neighborhood rather than an entire zip code. They will then compare your home based on size, features, and upgrades to those homes that were recently sold, thus appraised, in the previous 3 to 6 months. This range is contingent on how the real estate market is in the area.
They will then compare this information to existing homes on the market, looking at how your home compares to what else buyers are seeing on the market. After all, if yours is a well-kept home without updates being sold next to a completely remodeled home, you might not be able to get the same price per square foot as the other.
Additionally, realtors will consider whether it is a buyer’s or seller’s market. There are ways to create a bidding war of sorts, with a lot of eyes on your property in a seller’s market, you can under price the home and let the bidding begin. This tactic can work in many markets, especially Stockton, where supply is short, but it does not work well with all types of homes in those markets.
There are always exceptions and other factors that come into play. Distressed or homes with a lot of deferred maintenance will not create a lot of buyer interest.
IF YOU ARE LOOKING FOR A FAST WAY TO SELL YOUR HOME, GIVE US A CALL AT 209-481-7780 OR FILL OUT OUR ONLINE FORM TODAY!