A wise person once told me “Trulia and Zillow are like your drunk Uncle. They mean well, and some of what they say is true, but mostly what they tell you is inaccurate. You have to double check everything they say”.
Funny, right?
Except, it isn’t. We get calls and emails daily from prospective sellers wanting to list their homes and telling us what Zillow/Trulia have told them. Which wouldn’t be so bad, except that it is usually said with the belief that if Zillow/Trulia said it, it must be true.
It is a hard conversation after that. By citing why ‘The Terrible Two’ are wrong or inaccurate, agents sound like they have sour grapes. Once a prospective seller has that number in their head, anything lower feels like they are getting a raw deal or working with a bum Realtor. If the agents agree to list at an inflated price, and then it doesn’t sell or show, or feedback is poor, who then is to blame? Do they call Zillow or Trulia customer service and ask them to explain what happened? No, not really.
So let’s shed some light on how these two real estate giants get their ‘Zestimates’ and why you should not believe everything you read on the internet.
First, Trulia and Zillow are both owned by the Zillow Group. This occurred in February 2015 in a billion dollar merger that allowed Zillow to take Trulia under its umbrella and become an even bigger real estate power house on the internet. From a consumer perspective, there is no real reason to compare one to the other-the aggregate data they are using is the same. Choose the one that is more user friendly to you and you will do fine.
Next , what exactly is a Zestimates, besides the bane of every Realtors existence? A Zestimate is the catchy trademarked name for an estimate of value on your home provided by Zillow using the data “calculated from public and user-submitted data, taking into account special features, location, and market conditions.”
Hmmm. Okay. What does that mean?
That means that they get the majority of their information from municipalities, tax records and such when they are available. They also ask owners to edit the information on their homes once the home has sold, if they feel the information is inaccurate or missing information. For example, in researching for this article I reviewed one of our most recently sold homes. It is updated with the correct closing date and the correct sales price. But what is missing is important: The seller paid a considerable sum toward closing costs and will be reported in appraisals and be a factor in a true market analysis, or CMA, run by a Realtor. Zillow does not calculate any seller concessions into the Zestimate. If a home sold for $250,000 but the seller paid $5,000 in closing costs, then the net sale is actually $245,000.
It should also be noted that Zillow does not calculate foreclosures or short sales or otherwise distressed homes into their calculations. While you may think this is a good thing, the fact is they are there, and they will affect your comps in some way. In a healthy market there may be just one or two and they may do little to change your numbers, but in a market such as we have seen in the past, they can make or break a sale.
When we do a CMA to determine the value of your home and what we think it should sell for, we look at every little nuance we can find. We dig through tax records to find For Sale by Owners. We look at MLS listings and review features, updates, pictures that show remodeled kitchens, baths and all of the things that add or detract value from that home when considering it as a comp for yours. We also use those to see what things you might want to do prior to listing your home to help it sell-what worked well for your neighbors? New paint? Let’s do it. Updated appliances-it might help. We stay in your neighborhood, and if we have to go outside of it, we don’t go far. We know how styles, sizes, building materials etc. can change from one neighborhood to the next and we consider that when finding comps outside of your neighborhood. We will also come and visit your home. All of that makes perfect sense.
Right?
But, wait-did Zillow come over and look at your new wood floors? Did Trulia see your new roof, or the addition you added last year? No? Hmmmm. Did they know your neighbor put in all new flooring and windows? So, are they not a factor in your Zestimate? Good question.
That brings us back to your ‘user submitted data’.
Zillow says ‘Most upgrade information is not in the public records, and is not easily quantifiable. We do not know about home updates and remodels unless they have been reported to the local tax assessor, so those items are not used in Zestimate calculations. While we do utilize user-submitted data that is measurable, (e.g., additional bedroom count, bath count, and square footage) there is no way for us to systematically gather and verify the type of remodel or build information where the value is based upon how the final product appeals to the buyer. Because of this, the algorithm can’t use that information’.
In short, your new flooring, commercial appliances, green features, and eco friendly materials are not factoring into the Zestimate. Some of these things may only add interest to your home, but some may add value, and that needs to be reflected in your pricing.
Zillow collects information on the sale of homes in ‘a geographic area’, which sounds pretty similar to what we do. But do you know what that geographic area is? Your whole county. That’s right! Zillow collects data in a much broader range than an Realtor would. Your home could be compared with one three doors down or one on the other side of town, if they share the same criteria. Never mind that your neighborhood is newer, built with different materials and has amenities, etc. There is only so much data they can filter.
“Geographically, the data we use is much larger than your neighborhood. Often times, we use all the data in a county for calculation. “
Wow, right?
By their own admission (and a handy chart of percentages you can see for yourself is available on their website) more than 70% of homes they have a Zestimate for sell for a price that is within 10%-20% of the transaction price.
What if we gave you a suggested listing price and then quickly added ‘ or within 20% plus or minus. You just never can tell.’ How confident would you feel in our services? Would you hire an agent that gave you those kind of numbers, or that kind of disclaimer? No, and we wouldn’t expect you to. Yet that is exactly what Zillow and Trulia say, albeit in small print, in a section of their website.
You might not have time to research to that extent but we do because it’s our job. And we love it.
The purchase and sale of your home is one of the most important, and often most stressful, things you will do in your lifetime. It ranks right up there with marriage and job change. Don’t you deserve better information? We think you do. Don’t let an algorithm choose your home value. Let someone with experience, knowledge and integrity help make your next move a success. Let us help you.