Zillow, one of the most popular Real Estate databases online, is used by buyers, sellers, Realtors, appraisers—and anyone curious—to estimate the value of a home. It is a computer-generated estimate based on available data. While Zillow uses a formula to create a monetary value, we have found that not all factors (and often very important ones) are taken into account. So keep this in mind when perusing Zillow:
- Estimates rely heavily on tax data which may not be accurate. For example, if a property has been converted from a 3 bed/1 bath to a 4 bed/2 bath home, that may not necessarily be reflected in the property tax data used
- Upgrades and improvements are not taken into account. Unless a major permit was pulled, Zillow does not add value even if a brand new, high-end designer kitchen was added!
- Structural issues are not taken into account
- Inaccurate and not current information such as heat source, building amenities, and architectural style can affect the value of the home
- In areas where homes sell quickly, more information is collected at a faster pace than in areas where the turnover of home ownership is slower, so the data will be less accurate in those markets.
Even the best home value estimations still have a large margin of error, and while these websites can provide a good starting point, they are not reliable enough to set a list price or for submitting an offer. It is, after all, just a computer.
Most importantly, a computer cannot possibly tell you how a house feels—or who lives next door or what the neighborhood is like, which can greatly affect a home’s real value. The true value of a home depends on what it means to you, and the best way to get all of the information you need to help make that decision is to work with a local real estate expert! —Betsy Fedewa