Blog :: 09-2014

Sellers and Buyers Should not Rely on Online Home Value Estimates.

Why You Should Not Rely on Online Pricing Estimates

One of the favorite features of the online real estate portals is the estimate of value feature.

If you happen to look at the details, you will see that the online portals admit the lack of accuracy of their estimates. Unfortunately, few home-buyers or home-sellers drill down to the disclaimers about accuracy.

Zillow says the following:

"The Zestimate® home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

  • Getting a comparative market analysis (CMA) from a real estate agent
  • Getting an appraisal from a professional appraiser
  • Visiting the house (whenever possible)"

"Within 5% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 5% of the transaction price. Nationwide, Zestimates are currently within 5% of the final sale price 38.4% of the time."

"Within 10% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 10% of the transaction price. In the U.S. as a whole, Zestimates are currently within 10% of the final sale price 63.6% of the time."

This means that 36.4% of the value estimated are off by 10% and and 16.9% are off by more than 20%.

"Within 20% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 20% of the transaction price. Nationally, Zestimates are currently within 20% of the final sale price 83.1% of the time."

This means that 36.4% of the value estimated are off by 10% and and 16.9% are off by more than 20%. While this disclosure is nice, and appropriate, many people never look beyond the listing page information where the Zestimate® is shown.

Here are over 30% of the sale with their Zestimates® for homes sold in Windham between 6/30/14 and 07/31/14.

6 Kent St, Windham, NH 03087

4 beds, 4 baths, 2,292 sqft

Sold: $374,500

Sold on 06/30/14

Zestimate®: $347,957

Potential Loss to Seller: $26,543

13 Sharon Rd, Windham, NH 03087

4 beds, 3 baths, 2,788 sqft

Sold: $415,000

Sold on 07/07/14

Zestimate®: $364,342

Potential Loss to Seller: $50,568

5 Tully St, Windham, NH 03087

4 beds, 3 baths, 3,088 sqft

Sold: $409,00

Sold on 06/30/14

Zestimate®: $384,931

Potential Loss to Seller $21,069

3 Sagamore Rd, Windham, NH 03087

4 beds, 2 baths, 4,415 sqft

Sold: $676,533

Sold on 07/14/14

Zestimate®: $628,448

Potential Loss to Seller: $48,085

3 Granite Hill Rd, Windham, NH 03087

4 beds, 3.5 baths, 5,240 sqft

Sold: $1,050,000

Sold on 06/30/14

Zestimate®: $913,260

Potential Loss to Seller: $136,740

 

 

 

In some case the algorithm provides a price that is close to the value. However, the number of instances where it comes nowhere near close to the value is disturbing. Here are some sales that were close to the estimated value.

24 Blossom Rd, Windham, NH 03087

4 beds, 3 baths, 2,560 sqft

Sold: $410,000

Sold on 07/18/14

Zestimate®: $417,244

 

57 Bear Hill Rd, Windham, NH 03087

4 beds, 3 baths, 4,009 sqft

Sold: $630,000

Sold on 06/30/14

Zestimate®: $611,499

 

75 Heritage Hill Rd, Windham, NH 03087

4 beds, 4 baths, 4,550 sqft

Sold: $820,000

Sold on 07/03/14

Zestimate®: $818,301

 

8 Orchard Blossom Rd, Windham, NH 03087

4 beds, 3.5 baths, 3,334 sqft

Sold: $660,000

Sold on 07/02/14

Zestimate®: $646,406

Even worse, sometimes the information isn't even correct. 11 Northland sold for $580,000. If you were to rely on the sales price you could be out a whopping $133,333, or even with the Zestimate® you could be out $27,484.

11 Northland Rd, Windham, NH 03087

4 beds, 4 baths, 4,332 sqft

Sold: $446,667

Sold on 07/08/14

Zestimate®: $552,516

 

2 Mary St, Windham, NH 03087

3 beds, 2 baths, 1,938 sqft

Zillow says-Off Market

Actually sold for $298,000

Sold on 07/17/14

Zestimate®: $279,229

 

36 Glance Rd, Windham, NH 03087

4 beds, 3 baths, 4,339 sqft

Zillow says- Off Market

Actually sold for 566,000

Sold on 07/25/14

Zestimate®: $504,776

Potential Loss for Seller: $61,224

It is more than just sellers that are impacted by this faulty valuation method. Buyers also can be impacted. It can set you up for unrealistic expectations. Just imagine you are preparing an offer on a property and you rely on the online estimate to craft your offer. Another buyer offers more and you lose the house that met your needs perfectly all because you relied on erroneous information.

Fall in NH is for Home-Sellers

Fall-2Fall is a great time to sell a home in southern NH. Buyers in the market are eager to buy a home before the holidays. From experience it is also the time that many homes in the upper tier of the market go under agreement. Don't believe it? Well here are the statistics to prove that Fall is a great time for Home-sellers in Windham and southern NH.  In Windham, during 2013, 46 homes went pending from September 1st through November 30th. That was about 25% of the pending sales. From April 1st to June 30th of the same year, in what is considered the "Spring Market" 60 homes went pending which is about 32% of the homes. As you can see, home sales are very active during the Autumn season. Do you have a home to sell? Call 898-9038 or click and allow us to present the skills and strategies we will use to have your home gone before the snow flies.