A few days ago, a client of mine encountered a strange incident. The estimated value of a house on Zillow increased by around 50 to 60 thousand within just one week. Here's what happened: my friend noticed that a neighbor had put up a "coming soon" sign indicating the intention to sell the house. She quickly took out her phone, logged into Zillow, and checked the estimated value of the neighbor's house, which was nearly $650,000 at that time. However, to her surprise, just a week later, the house was listed for sale. Although Zillow hadn't yet displayed interior photos of the house, the estimated value had jumped to almost $720,000. This left my client friend quite confused, and she came to me with the question of whether Zillow's valuation can be trusted and how Zillow determines the value of a house
According to the explanation on the Zillow website, Zillow employs an algorithm called Zestimate when estimating the value of a house. The factors considered by Zestimate include detailed property information, relevant property tax information, market data, and market trends. So why would Zestimate increase the valuation by 50 to 60 thousand in less than a week? Is it due to manual modifications? According to the explanation on the Zillow website, Zestimate cannot be directly modified. However, homeowners can provide additional information about the house, such as kitchen renovations or added bedrooms, after proving their legitimacy as the rightful owner of the property. Once Zillow accepts this supplementary information, Zestimate will adjust the estimated value of the house.
After explaining this to my client friend, she understood. However, I also reminded her of two points.
First, the valuation provided by Zestimate is not an officially recognized government appraisal. In California, licensed appraisers are the ones authorized to assess property values. If obtaining a loan for a home purchase, lending institutions will typically hire an appraiser to assess the property's value to ensure it aligns with the loan amount.
Second, the real estate market is constantly changing, and the sentiments of market participants fluctuate. Zillow's valuation reflects an overall average of the market, but when it comes to the specific property you are interested in, there are many strategic considerations. It is crucial to choose a qualified real estate agent who understands the market and negotiation tactics. Having a discussion with them is essential. A competent and trustworthy real estate agent will tailor a pricing strategy for you, helping you secure the property you desire.
