12/12/23

Real Estate Insights

Sellers—Don’t Be Fooled by Zillow Estimates

Attention, homeowners! Are you considering listing your home in 2024? Moving on to greener pastures is an exciting time, but there’s something we need to talk about first. You know those Zillow estimates? They come in the form of “home report” emails from Zillow, and look like this: 

We’ve chatted with many homeowners who feel inspired by these emails. If you’re feeling motivated to jumpstart your next era (whatever that means to you) we think that’s great! Maybe you want to use your ROI to travel for a bit. Or maybe you’re hoping to fund your dream home. But before you start packing your bags, know that these “Zestimates” are unreliable sources. At The Hub, we believe honesty and transparency should be valued above all else. It’s not Zillow’s fault—their business model caters to the entire country. That’s too big of a target audience to deliver personalized, accurate results. In this post, we’ll dive into why Zillow estimates can be risky and show you how to get an accurate estimate that won’t lead you astray.

What Are Zestimates?

Zestimates are AI-calculated values that aim to estimate the value of your humble home. Zillow crunches all sorts of data, including recent sales, tax records, and a sprinkle of mystery, to come up with these numbers. Let’s face it, Zestimates can be quite tempting. Who wouldn’t want a quick and easy answer to the timeless question: “What’s my home worth?” Who wouldn’t see stars in their eyes when they see their home value has appreciated by 40%?

Here’s Why Zillow Estimates Are Risky

Now, here’s the deal – those Zillow estimates can be a tricky beast to tame. Sometimes, they’re right on target. Other times, they’re about as accurate as trying to hit the bullseye blindfolded. Zestimates are okay to use as a general guide, but trusting the Zestimates alone can lead you down a treacherous path, potentially impacting your home sale in all the wrong ways. If you overvalue your home, it will stay on the market for a long time. Long listing times are a big red flag for buyers. It leads them to wonder if there’s a bigger issue at play (like roofing or foundation issues). Even if you remove your listing, take a break, and list it again with a more accurate price, the listing history is public information. Buyers will always have a small voice in their head that’s wondering “What’s wrong with this place? Why isn’t it selling?”. 

Zestimates are a bit like relying on a fortune cookie for your financial decisions – entertaining, but not exactly solid advice.

How to Get an Accurate Estimate

1. Work with an Experienced Appraiser

If you want a precise estimate of your home’s value, it’s time to call in the experts. Find a qualified appraiser who can provide a professional opinion. And remember, even the Mona Lisa needs dusting every once in a while. Be sure to update your home before seeking an appraisal. A clean home and small maintenance updates can make a world of difference.  Small fixes here and there can make a world of difference.

2. Research your market 

Pay attention to your local market trends. The value of your castle can be heavily influenced by what’s happening in your kingdom. Compare your home to others in the neighborhood, considering factors like similar square footage and features. And remember, location makes a big difference. A palace in the suburbs might fetch a different price than a cozy cottage in the city’s heart.

3. Talk to a Trusted Real Estate Agent

No one knows what’s happening in your local real estate market better than a real estate agent. Madison has a unique housing market with its own economy, separate from the national housing bubble. A trusted Madison real estate agent will be able to let you know if your Zestimate is way off base. 

A Real-Life Zestimate Horror Story

As an intergenerational family business, our real estate team could fill a book with stories from the Madison real estate market. Many of them are joyful, but others are cautionary tales. We had a client (we’ll call her Jane) who came to us after months of stress. She’d been tracking her Zillow market updates for a long time. Each month she grew more excited- Zillow reported her house had increased in value by 30% in the past year alone. She started browsing local houses for sale with the price range she could afford if sold her home for max value. She came across her dream home for sale: a historic Victorian in Maple Bluff. Jane was involved in several real estate transactions throughout her life and decided to save on transaction fees by listing her house For Sale By owners with the most recent Zillow estimate.

Worried the Maple Bluff home would move off the market quickly, she made an offer. When she came to us, her house had sat on the market for 5 months. She’d succeeded in securing her dream home but had to dig into her retirement funds to pay 2 mortgages. We helped Jane quickly sell her home with a realistic price range. She still saw an ROI but it wasn’t enough to bring her mortgage rate on the Maple Bluff home down significantly. After an era of being  “house poor”, with a gorgeous home but not enough extra funds to enjoy dinners, travel, and entertainment we helped Jane list the Maple Bluff home. Our heart breaks for Jane, but there’s something to learn from this experience.

Ready to get an accurate appraisal?

Reach out to the Hub team and we’ll get you in contact with the best home appraisers in the area. Happy selling!