Zillow is one of the top real estate sites in the world. It is an incredible real-estate online site offering information to consumers who want to make informed decisions.
The mobile version and the desktop applications both work exceptionally well and can provide buyers with information on properties available for sale and property information on homes and parcels not on the market. The mapping feature allows consumers to “hone in” to the neighborhoods and homes they desire.
Zillow has another feature that many buyers and sellers use: It is the Zestimate and, according to Zillow, it is a home valuation of the estimated market value of a property, computed using a proprietary formula.
Zillow suggests its use as a starting point in determining a home’s value, and it further recommends having a real estate agent complete a comparative market analysis or getting an appraisal. Zillow acknowledges the limitations of the Zestimate, a compilation of public records, and Zillow has not inspected the home and is not knowledgeable about special features.
Unfortunately, many consumers have not read about those limitations and recommendations and often count on the Zestimate to be a correct market value of the property.
When the market value is higher than suggested by a real estate agent’s comparative market analysis, sellers want to believe the Zillow Zestimate is accurate, and it can lead to a home being marketed at the wrong price. As pricing is one of the most critical functions in marketing a home, a higher-than-market price can lead to long “days on the market” and potentially, the lack of a sale.
The Durango area is a unique market and far different than other metropolitan areas. Most of the big cities are dominated by large developments of similar homes, and estimating value based on other home sales is far easier.
In La Plata County and in Durango, almost all of the homes were designed and built individually, with a variety of materials, different levels of customization and large differences in size. It is not unusual to have homes in very different price ranges next to each other. You can drive down Durango’s East Third Avenue as a simple example.
Unfortunately, when the Zillow Zestimate is low compared to the market value of the property, buyers want to use it as having more integrity than it deserves, and of course, sellers are often angry at the Zillow Zestimate, as it makes it more difficult to negotiate a transaction.
I have personally seen Zillow Zestimates that are hundreds of thousands of dollars different than the market value.
In conclusion, use Zillow to search for properties, and by all means, take a look at the Zillow Zestimate, but be careful in believing that it is correct.
Use your real estate agent to help you determine the correct market value, and perhaps turn the Zestimate into a Zactimate!
Don Ricedorff is a Realtor at The Wells Group in Durango, and a past president of the Durango Area Association of Realtors. He can be reached at email@example.com.