Zillow is being sued by a disgruntled homeowner, and the reason why will tell you everything you need to know about their Zestimates.
In case you haven’t heard, a recent lawsuit was filed against Zillow by an Illinois homeowner and it’s causing ripples in the real estate industry. How does this affect you?
First, let me start by saying I’m not here to hate on Zillow like so many other agents do. I actually love Zillow, and many of the clients I have today first got in contact with me after reading my reviews on Zillow. I think they do a great job of mapping out neighborhoods and providing information about certain areas, school districts, etc.
Now, the homeowner in this lawsuit claims her home is valued at $626,000, but Zillow values it at $562,000, which is a $64,000 difference. This woman feels that the typical buyer will feel that her home is worth less because of its Zestimate. Zillow responded by saying that a Zestimate is just a starting point to determine value, and it’s not an official appraisal.
Even well-known real estate mogul Barbara Corcoran of ABC’s “Shark Tank” chimed in on the matter on “Good Morning America,” which you can watch here.
When you start your online home search, Zillow is a website you’ll likely land on because they do a great job capturing nearly 64% of all real estate-related web traffic. Is it a good start for determining the value of your home, though?
Barbara Corcoran says that it’s a starting point, but not a reliable starting point, which I agree with.
You may not know this, but Zillow admits that its fault factor is around 5.6%. That means that less than half of the values in a given area are less than that fault factor percentage and half are even further off. To put that into perspective, on a $250,000 house, that’s a $14,000 difference one way or the other.
In Texas, Zillow doesn’t even offer a percentage of error because we’re a non-disclosure state, meaning our sales prices aren’t publicly disclosed at closing. You need to hire a professional to get that information.
The good news is that Zillow CEO Spencer Rascoff is opening up their platform and offering a $1 million prize to any person or team who can improve their algorithm. I encourage you to take advantage of this opportunity if you think you can do so. In the meantime, if you really want to know the value of your home, call me. My team and I can put our experience of selling hundreds of homes over the years to good use so you can sell your home for the most money in the shortest amount of time.
If you have any questions about this or any other real estate topic, please don’t hesitate to reach out to me. I look forward to helping you. If you have any questions about this or any other real estate topic, please dont hesitate to reach out to me. I look forward to helping you. tions about this or any other real estate topic, please don�t hesitate to reach out to me. I look forward to helping you.