According to Zillow, Zestimates have about 5.1% median error rate for the Sacramento region. So for our median priced home ($289,500), the range of estimates can be either too high or too low by $15,000. Not too bad, but as you increase the price, homes valued in the $500,000 range can be off by as much as $25,000 and you can see that it can be off a lot more as you increase the price further. There are situations I’ve seen where it’s off even more because understand that 5.1% is just their median error rate. Sometimes it’s off by greater than 10%.
So what gives? Why can’t you trust these guys? Well for one, they have never been in your home. There’s data that’s public and quantifiable such as the address, square footage, bedrooms, and baths and there’s sold prices with the same associated data for homes in the neighborhood too. They also pull data from the tax record which should be correct, but not always! There have been many times when the data doesn’t match reality. Sometimes missing an addition or a bathroom. So giving you an estimate is an idea you shouldn’t necessarily be married to. Reading it online doesn’t make it real.
So the subjective stuff includes whether it’s been remodeled and even if the remodel is going to appeal to a wide swath of people. You know, some remodels are done with poor workmanship or with too many crazy ideas that someone got off of Pinterest. The truth is that not everyone finds a wall of colorful barnyard wood to be valuable and some would consider it a cost to rip out. Honestly, I’ve walked into a home where the entire living room wall looked like the photo below but with even more color such as adding red to the mix. It wasn’t a value addition.
The greatest factor though likely will be the condition of the home. A home that is 50 years old with pink bathrooms and toilets, narrow kitchens, and old blue carpets may have the exact same square footage as the house next door that was completely gutted and remodeled with current trends that appeal to today’s buyers. The market (aka Buyers) doesn’t value them equally. Additionally, Zillow doesn’t know if you have stainless appliances or a new roof or an old shake roof which will cost thousands to replace.
Another factor that the algorithm can’t factor is the neighborhood. Are the houses well-kept, is the neighborhood walkable, or if the livability trend is on the up or on the outs? Sometimes school boundaries change and that abruptly changes the desirability of a neighborhood.
Don’t get me wrong. Zillow is a great resource. I use it all the time, but I use it as a very general range and it can be used when you’re looking for houses in other areas of the country to get an idea of prices there too. When it comes time to determine the real current market value, there’s a lot more to it. An experienced Realtor will need to see the inside of your home and then compare to like homes. Call me. I’d be happy to help you find out what that is.