The Living Room Blog

Is Your Home Really Worth What the Internet Says?

I’ll admit it – I’ve typed my own address into Zillow too, just to see what popped up. I mean, hasn’t everyone? Zillow’s Zestimate tool (and other online automated home valuation tools) are easy and accessible. One click, and your home is suddenly worth $500,000. Or $525,000. Or maybe it dropped $20,000 overnight for no clear reason. I see these online automatic pricing estimations come up all the time in conversations. The problem is when buyers or sellers put too much weight on these numbers – it can set expectations that don’t line up with reality. It is a good reminder that Zillow, your Listing Agent, or your dad’s friend who was a realtor 15 years ago do not determine home values. Buyers determine home value when they purchase a home. A seller can propose a price to the marketplace that they feel is accurate (the list price) – but buyers really have the final say. Too many times have I heard a list price defended by an automated pricing tool. The intent of these tools was to provide a general idea of what a home is worth, but they do not take into account many important pricing elements. So, let’s talk about it. What Is An Automated Home Valuation Tool? These online programs use a computer algorithm that pulls public data (like recent sales, tax records, and square footage) to estimate your home’s market value. But here’s the thing:– It’s never seen the inside of your house – It doesn’t know what you’ve renovated – It doesn’t understand that your lot backs to a greenspace, while your neighbor’s backs to a busy road – It has no clue what buyers are feeling in your local market this week – It has no idea how many windows your home has that let in all that gorgeous natural light – It doesn’t consider that your neighbor’s home reeks of cigarette smoke while perhaps yours does not Zestimates and similar online tools are a general ballpark, but not an accurate, trusted guide for pricing your largest asset. Why It’s Often Wrong (Sometimes by a lot…) Automated Home Valuation Tools can be off by tens of thousands of dollars. In some cases, even more. That’s because they miss the details that truly impact value, such as: Condition and style of the home Layout and flow Street, school, or neighborhood differences Renovations and upgrades The current demand from buyers in your area What to Do Instead If you’re just mildly curious with no plans to make a move anytime soon, then these approximate values may be all you need and often times do the job. But, if you’re wanting to gain a deeper understanding: Play Market Detective in Your Area – If you like to be a bit more involved in educating yourself on your local marketplace, I recommend monitoring recently sold inventory and identifying patterns. For instance, do all the homes on one side of the street (that back up to a busy road) end up sitting on the market twice as long as the neighbors across the street? Does it appear that all the single-level homes in your subdivision sell for much higher than those in which all the bedrooms are upstairs? These nuances can equip homeowners with insight that start to scratch the surface of home sales and trends – and help align your home’s value with educated, data-supported trends. Get a Local, Professional Perspective – If you prefer to have an additional resource or if you’re even considering selling you should get a second opinion. A thoughtful, hyper-local one.When my team and I are thoughtfully pricing a home, we utilize a Comparative Market Analysis (CMA).  We don’t just look at price per square foot. We look at: Condition Local buyer demand Agent conversations and feedback Recent sales trends Charm and character This data is paired this data with experience on the ground — from showings, inspections, and negotiations — so you’re getting a price backed by both analytics and nuance. Even if you’re just curious and not planning a move, I’m always happy to pull a quick snapshot for you. Sometimes it’s just fun to know! — In summary, it’s important to know that automated online home valuation tools aren’t bad, and actually serve as a great starting point. However, it is important to remember that they are a launching point for pricing – not the end all be all! Thanks for reading and for always supporting my business; I truly love being your go-to real estate resource, and I’m always here to help when you need advice, perspective, or just someone to bounce ideas off of. Your friend and realtor, Sofi