But Zillow Says My Home is Worth…
Ever been talking to a client, be it buyer or seller, and have them turn to you and say:
“But Zillow says the home is worth ________?” (Fill in the blank with a number higher or lower than what you are telling the client the home is worth.)
Yep, me too. Back when I was actively selling real estate, this conversation happened on occasion. Certainly not with every client, but a few now and then.
What is the best way to handle “Zestimate objections”?
Try using the information and data Zillow provides right on Zillow.com.
If you’ve got one of those clients who is the spreadsheet type that likes to wave numbers and equations in front of you, you’ll likely find even the most stubborn techie-type out there can’t really argue with the source of that data.
Start with a little consumer education. We display all over the site links to what the Zestimate is, as well as how accurate it is. But let’s face it, not everyone reads the fine print. As a real estate professional, it’s important for you to understand exactly what the Zestimate is, how it’s calculated, and how accurate it is. Being able to explain this to your consumers will go a long way toward ending the “But Zillow says….” conversation — maybe before it even starts.
What is a Zestimate?
Start with reading this page. Let’s highlight a couple of things from that page:
The Zestimate® (pronounced ZEST-ti-met, rhymes with estimate) 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)
Is a Zestimate an appraisal?
No. The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.
Those two sections alone are enough to help most people understand that the Zestimate is simply a starting point and not intended to replace the opinion of a real estate professional.
But if that’s not enough, if Mr. or Ms. Datanerd is still waiving a spreadsheet in your face, it may be time to bring out the big kahuna — the Data Coverage and Zestimate Accuracy Table.
You’ll see some of the larger metro areas displayed. Clicking on the “States/Counties” link will pull up a list of states, and clicking on a state will then pull up a list of counties within the state — each county will have its own Zestimate accuracy data.
Let’s look at my old home state, Arizona, for example:
Definitions for each of the columns is provided on the accuracy table page. Looking at Maricopa County, which represents most of the Phoenix metro area, we see the median Zestimate error is 8.5 percent. That means half of the Zestimates in Maricopa County were closer than the error percentage and half were farther off. For example, in Phoenix, Zestimates for half of the homes are within 8.5 percent of the selling price, and half are off by more than 8.5 percent. It also tells us that 57.3 percent of the Zestimates are within 10 percent of the sales price. Conversely, that means 42.7 percent of Zestimates in Maricopa County are more than 10 percent off from the sales price.
For a computer-based algorithm that can’t see the inside of a home, can’t smell the dairy farm down the road and doesn’t know that the neighbors across the street have painted their house purple with polka dots, that’s remarkably accurate.
But it’s not accurate enough to determine what price to set for a home about to go on the market, or what price to offer on a home. The Zestimate isn’t intended to be used like that.
So don’t use it like that. The Zestimate is a tool — a tool designed to provide a starting point in home valuation, a tool to track trends over time. The Zestimate is not a Zappraisal, it’s not a Zprice. It’s a Zestimate. You wouldn’t use a screwdriver to hammer a nail, would you? So don’t use the Zestimate tool in a way it wasn’t intended to be used.
A big part of a real estate agent’s job is consumer education. That education includes informing your clients about the Zestimate — how it’s calculated, and how it should — and shouldn’t — be used. Zillow provides a lot of information about the Zestimate and its accuracy. Use the info ZIllow provides to help your client understand why you, the real estate professional, are far better suited to provide an opinion of value. Use the “But Zillow says… ” conversations to show the value you bring to the transaction. Consumers are smart and once you point them to the right information, they tend to make informed decisions. If they don’t, consider getting that real hammer out of the toolbox…
Some helpful links for discussing Zestimates with clients:
Zillow Academy (check for Zestimate-related classes. And more!)