We’ve been hearing so much about fake news lately, haven’t we? It’s everywhere! But did you know that real estate has its own form of fake news? They’re called Zestimates…or fake home value estimates. And we have seen them wreaking havoc for both homebuyers and home sellers in Collin County and Denton County, TX.
So why are Zestimates “fake?”
First, because Texas is a non-disclosure state. This means that when a home sells in Collin County TX or Denton County TX, the sold data is not disclosed to the public. The only means of finding true sales prices (real sold data) is through the professional multiple listing service (MLS) which is only accessible by professional REALTORS® and appraisers in Texas. Large portal sites (like Zillow, Trulia, etc.) do not use real sold data for their home price estimates because they do not have access to that real sold data.
Explained another way? In the real estate world, Zestimates aren’t worth the web page they’re printed on because Zillow collects data from county records rather than the MLS (which Zillow does not have access to). That is why their Zestimates are considerably off from the true appraised value which is derived from sold comparables (comps) that REALTORS® and appraisers use and have access to.
So why does this matter? Because homeowners in North Texas – and across the country – are getting a greatly skewed understanding of their home’s true value based on the incorrect information Zillow is providing them (i.e. their Zestimate). And this leads to disappointment and difficulty when trying to sell or buy a home.
Almost every day we read or hear about the issues and heartache that Zestimates cause homeowners and homebuyers. This May 11, 2017, article provides research to show the problems homeowners and appraisers are experiencing (due, in part, to portal website home estimates):
Appraisals in April were, on average, 1.9 percent lower than what homeowners expected. That means on an average home price of $236,400, homeowners misjudged their price by about $4,500.
The gap between appraiser and homeowner views on price is spreading wider, according to the latest National Quicken Loans Home Price Perception Index. April marks the fifth consecutive month that the gap between price opinions has widened.
There’s a significant body of articles and research available from multiple sources on the faulty home estimates that portal sites like Zillow provide:
Even Zillow admits the following on their website:
The Zestimate® home value is Zillow’s estimated market value for an individual home. It is a starting point in determining a home’s value and is not an official appraisal. 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)
So what is a homeowner or homebuyer to do?
Simply, inform yourself. Educate yourself.
Can Zillow (or other online sites) be a part of that education? Of course. But realize that the value estimate you receive is, as they say, “a starting point – not an official appraisal” – one not based on real sold data.
To obtain the true sold data you need to make an informed decision on your home sale or purchase in Collin County and Denton County, TX, ask a professional REALTOR® to conduct and provide you with a comparative market analysis. Or pay a licensed appraiser for an appraisal.
At The Tomlin Team, we are all about providing you with the information you need. If you have any questions, let’s sit down over a cup of coffee and get them answered. Or if you’re ready for a professional CMA, we are happy to do one for you.
All you have to do is ask!
We are here for you, at no charge, to simply answer your questions. Feel free to email us at firstname.lastname@example.org or call/text us at (214) 726-2805.
Thinking of selling?Click HERE to obtain a thorough report of what your home is worth – today! Time to buy? We have an invaluable Spring 2017 Buyer’s Guide special report for you! Click HERE to receive your copy!