How Much Do You Think Your Home is Worth?
When I speak to homeowners who consult with me before listing their home for sale, I find the first thing they ask or want to know is, "What Is My Home Worth?" Well, that is a simple question with a potentially complicated answer. I will usually turn the question around and ask them, "What do YOU think Your Home is Worth?" I do this because I want to understand where are they at mentally in the process of selling their home. At this stage, most homeowners have not emotionally detached themselves from their home to look at it analytically (as a house) and, in many cases, will overvalue their home's worth.
The most common answers I get back from a seller is:
- Price based on what the neighbor's house sold for
- Price based on what they bought their home for at the height of the market plus what they spent on it since living there
- In some instances, the homeowner will base the Price on an appraisal that is no longer valid (a year or more old)
Myth: A Zillow Zestimate or Trulia Estimate is like a CMA or Appraisal
WRONG! Many consumers looking for answers to any of their questions in this high-tech age, will begin their research on the Internet. So it is no surprise when a seller begins their search for home value on the Internet and tells me that they based it on data they found via Zillow Zestimates, Trulia Estimates, Homefinder.com, etc. I pick on Zillow Zestimates only because the profound majority of prospective sellers I have worked with seem to get their "Internet Home Value" from Zillow. The reality is, ALL of these Internet Sites claiming to provide Home Values cannot replace the accuracy of a Comparative Market Analysis (CMA) or a recent home appraisal. There is much more data that a localized CMA or appraisal considers - land value, condition of the home or property, unique features or amenities, seller contributions, recent renovations to a home, foreclosures in the area, etc.
In the Greenville SC market, the Zestimates tend to be LOW
compared to what homes are actually selling for.
Choosing a Realtor that is armed with this knowlege can help you combat "low-ball" offers on your home.
Homeowners looking at these Internet Home Values rarely look at the fine print regarding the accuracy (or lack thereof) of the home values these Internet sites are providing. The data and accuracy varies greatly from county to county and state to state. Furthermore, I have seen the margin of error fluctuate an additional 5% from quarter to quarter just in the Greenville SC!
Below is a table illustrating an example of Zillow Zestimate Accuracy based on South Carolina Counties. This data is computed for the three-month period ending December 31, 2011 and was last updated February 29, 2012. This table was taken from Zillow today (April 26, 2012).
I have highlighted Greenville County. Just in the last couple of months (comparing data from period ending September 30, 2011), Zestimate Accuracy according to Zillow declined from 4 stars to 3 stars.
Looking at the table above, approximately 29% of the time, the Zestimate was within 5% of the selling price, 50% of the time the Zestimate is within 10% of the selling price and finally, nearly 72% of of the time the Zestimate was within 20% of the selling price. That still leaves a SIGNIFICANT percentage of homes who's Zestimate is inaccurate (high or low) MORE than 20% than the selling price. That quickly translates to $10's of thousands of dollars quickly! The median error is 9.6% (which was slightly better than the 10.8% in the previous quarter), which means that the Zestimate for half of the homes in Greenville County for this period are within 9.6% of the selling price, and half of the Zestimates are off by more than 9.6%.
Trulia Estimates for Greenville County SC had a median error of 12.7% (according to data generated on March 4, 2012). In fact, a quote taken from the Trulia website regarding the "accuracy" if its Home Estimate data says it all:
"If you're looking for a precise value for your home, or if you're thinking of selling your home, we recommend you talk to a real estate professional. After all, our algorithms are smart, but we can't know everything about your home’s features and location."
Buyers or Sellers: Consult with Your Local Realtor to get Accurate Home Value
If you are interested in selling your home, relying on Internet Home Values from sources like Zillow Zestimates or Trulia Estimates could create a situation where you list your home too high, missing that perfect buyer in the prime months of the year, causing your home to sit on the market longer than it should. In other cases, it may cause you to leave money on the table with a low selling price. We especially see this with unique properties outside of a typical neighborhood where valuating land (acreage) is important.
If you are a propsective home buyer relaying on Internet Home Values to make an offer on a home for sale, you may insult a seller (offer too low) or even spend more for the home than what the market is willing to bear. Right now, it is still a buyers market, however the best buyer is armed with accurate information to make a successful purchase on the home of their dreams.
In either case, as a prospective buyer or seller, get professional representation from a local, licensed Realtor who is a FULL-TIME real estate agent. Ask how many years they have been representing buyers and sellers in your local market. Delco Realty has been serving the Greenville SC Real Estate Market since 1975. Let one of our Delco Realty agents help you buy or sell your Greenville SC home so you get the best deal for YOU!!
Lisa DeLuca-Alexander | (864) 915-8547