There are so many factors that go into valuing a home that it can be tough even for professionals with years of experience. There’s a saying in real estate that says “your home is worth what a buyer is willing to pay.” Helpful isn’t it? While it’s difficult to determine value, with the help of the internet and big data tracking home sales across the country, these estimates are much better than they used to be. That said, the question remains “Should I Trust Zillow to Determine My House Value in Lancaster?”
The short answer is absolutely not!
Below we’ll discuss why this is the case, and what you can do about it.
The “Zestimate” Margin for Error
In Pennsylvania alone, Zillow self reports that for homes that aren’t on the market, the median margin for error is over 10%. If you take that a step further, that could mean at $20,000 margin for error on a home worth $200,000. For higher priced homes, it’s even more. That can be a huge difference in your bottom line if you trust Zillow and it’s off.
Keep in mind that it can be off in either direction. If it’s too low, you could be leaving money on the table. If it’s too high, you will likely be sitting on it waiting to move. This can have tremendous costs as you’re forced to pay the mortgage, taxes, utilities, etc. while it sits on the market. Also, the longer a home sits on the market, the less interest it gets from buyers for that reason alone. Many think these days that if a house sits on the market when everything else is moving quickly that there must be something wrong with the house itself.
How Does Zillow Come Up with a Zestimate
Zillow has it’s own special formula to come up with pricing for your home and other homes in the market. They look at the features of the home that are in the public record or in their system, but those are often extremely inaccurate. It will also look at square footage, number of bedrooms and bathrooms, etc. These help, but there are definitely times when the data in the Zillow system doesn’t even show the correct number of beds and baths! This is huge, and can create massive differences between the Zillow estimate and the true value.
The proprietary formula looks at the market pricing in the area. It will factor in the size of the house, the lot and all features of the home including the number of bedrooms, bathrooms, pools and highlighted features. However, even Zillow will say this is a starting point for a true valuation of your home and should not be considered an appraisal or true value.
The biggest issue is that Zillow can’t see interior and exterior condition of your house. The conditions of similar sized houses can be drastically different. Also, if one house just put on a new roof and the other house desperately needs a roof, those types of big capital improvement projects will have a definite effect on value.
Finally, school districts play a very important role in determining value throughout most of the country. Even if two houses have the same number of beds and baths and similar square footage down the street from one another, if they’re in different school distracts the difference in value can be big. Zillow has struggled with this accuracy for quite some time and it still leaves a great deal to be desired.
How to Obtain Accurate Values
Professional real estate agents and professional home buyers understand that in order to obtain a true value of the property that we must look at all of the factors involved in not only the physical house and property, but the market and sub market all the way down to the neighborhood and street. While it’s never an exact since, experienced real estate professionals often develop a very good system of accounting for all of the elements in the equation.
These professionals will also take into consideration your situation and desires with the property. For example, if you’re looking to move the house quickly the agent will know how to price the house appropriately within the valuation, but keep it at the lower end to hopefully help facilitate a quick transaction. The same can be said if you don’t mind sitting on the home for a bit, but wish to get top dollar. A good agent or buyer will be able to determine the value of your Lancaster house in any type of market condition.