Home buyers often want to get pricing information for a property without having to rely on a real estate agent. This is where real estate sites like Zillow.com come in handy. However, can you really rely on a Zillow home estimate?
How Zillow’s Estimates Work
Zillow acquires data from tax assessor and county records, real estate brokerages, and multiple listing services (MLSs). It also incorporates user-submitted data. For example, a homeowner may contact Zillow to update information about their property’s features. The owner may improve the Zestimate accuracy for their home by submitting up-to-date information on finished square footage, number of bedrooms and bathrooms, and lot size.
How an Agent Estimates Home Value
When an agent assesses a property, typically they begin by studying it from an overhead, satellite view on Google. They note whether it backs up to a busy street, the proximity to commercial property or freeways, the size of other homes nearby, the vegetation and landscaping, and its orientation to the sun. If available, they will view any photos of the exterior plus a street scene.
An agent might then run an automated valuation. There are two ways to do this: one uses specialized real estate software, and the other uses sales pulled directly from the MLS. The resulting values from these two methods are often very different from each other, but if used together they can provide a range of value.
Armed with that information, an agent then inspects the home and looks at it through the eyes of a buyer and an appraiser, as well as considering how the house will be positioned against the competition on the market.
How Appraisers Assess Value
Before the lender will sign off on your home loan, they will insist on a home appraisal. Typically, this costs several hundred dollars and is paid for by the buyer.