Sites Like Zillow, Good For Exposure, Horrible For Determining Value
While I was listening to the news today, I heard a report that used Zillow.com as a source for home values. I was immediately shocked that they used a source like that to get their facts. I knew in the back of my head that their numbers had to be way off but I decided to run a little test on my own.
I tested a normal subdivision in Greenville with prices ranging anywhere from $150,000's to $250,000's. The subdivision currently has five homes for sale and has seen seventeen sell since the beginning of the year. One of the homes currently on the market has 4 bedrooms, 2.5 bathrooms, and over 2200 square feet and is in top shape. They have it currently listed at $210,000. After looking at the comparables from the year so far, I feel like they are at a very good listing price and right where they should be. They are also competitive in price with the other homes on the market. If they end up getting 97% of what they are asking for the home they should have a final sales price of $203,700. I even found multiple homes with a lot less square footage and one less bedroom going for right at $200,000 since the beginning of the year. Based on what the market will allow, the home should go for somewhere between $203,000 and $208,000.
So, what does Zillow say the home is worth? I put the address in Zillow's address search and the "Zestimate" gave me a price of $185,000 for the value of the home! What is interesting though is that on one that just sold a few moths ago with less square footage and one less bedroom it gave an "Zestimate" of $204,000! This shows that their estimate are not based on comparables at all but on things like tax records. They are producing these estimates without ever seeing the house to see if it would actually compare, taking into account distressed situations, or having any understanding at all of what that subdivision's local market will allow.
Bottom line, Zillow is another source for exposing a home for sale to the web but a horrible source for determining value. This is especially true when reporting a news story. Zillow should never be used as a factual source and the Greenville, SC Zillow search that I did proves this. The best way to determine a fair market price for your Greenville Area home is to use a real estate agent or appraiser that deals with the local market on a daily basis and can compare apples to apples in person.
