Technology makes our lives easier and more difficult at the same time. The abundance of information proliferating the internet turns us into armchair experts on every subject — including real estate. After all, Zillow and Trulia show us a home’s value. Or do they? The truth about cyber home values and how you can change them to win over buyers.
Zillow Kansas City, Mo.
Price. It’s a subjective number. You may value a home for one price, and I may place a different value on it. Add in computer algorithms, and we have a third rate.
Trulia calls it a Trulia Estimate.
Zillow calls it a “Zestimate®.” It’s an estimated market value of a home, based on publicly available data. Zillow points out it’s far from an appraisal, and serves as a baseline.
Both companies use proprietary formulas and algorithms to calculate your home’s value. Typically your home’s value, location, and market conditions play a role. Trulia and Zillow also rely on publicly available information. In some states, that data is better than in other states.
Zillow realizes its Zestimate® is just that — an estimate. It’s offering a Zillow Prize of $1 million for a methodology that improves its Zestimate® algorithm.
Nationally, its error rate is 5-percent. In certain markets where there’s limited public information on home sales, like the Kansas City area, the data is not as accurate. That’s why every homeowner should look at their Zillow home value.
Missouri and Kansas Zillow and Trulia estimates
Zillow rates their home values on a five-star system, with five being the most accurate. One is the least reliable.
In Kansas City, there are more than 671-thousand homes on Zillow with a Zestimate®. However, Zillow only gives Missouri home values one star for accuracy.
There are two reasons Missouri only gets one star out of five. In Missouri, the values are either based on the tax assessor’s value or Zillow can’t calculate the accuracy based on available data.
Zillow says a tax assessor’s value is not as accurate because it’s one data point rather than numerous like Zillow usually relies on to calculate its Zestimate®.
Trulia also points out the complexity of estimated prices in Kansas and some counties in Missouri, because sale prices are not publicly available.
While real estate agents prefer you ask them what your home is worth, so they can pull sale prices in your neighborhood, you can’t ignore Zillow home values. A million people visit Zillow every month.
Since the accuracy of the data in Missouri and Kansas is low, Kansas City homeowners should update their Zillow home value.
The actual value, given by an appraiser, comes much later in the home buying process.
While it’s an estimate, that number is valuable for some. Buyers and sellers put a lot of weight in the Zestimate®, even if real estate comps show something different.
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How to change your Zillow home value
Zillow offers homeowners the opportunity to edit their Zestimate®. Trulia relies on feedback to find systematic issues with its algorithm. You can’t manually change the price.
So how do you change your Zillow Zestimate®?
First, claim your home. Full disclosure, here. Zillow requires an email address to move forward.
Once you enter your email address and claim your home, you verify the facts are accurate. You update the number of rooms, square footage, amenities, roof type, etc.
What’s my home worth?
Zillow and Trulia are national companies pulling data from publicly available sources.
When a Realtor® tells you the value of your single family home, they use a Comparative Market Analysis or CMA. This analysis is custom made for you and reviewed by the agent to remove homes that don’t match your specs or upgrades.
There’s a human factor to buying and selling a home. Emotion plays a huge role, and real estate agents help you balance that so you find the right price.
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When deciding what price to list a home, you also need to consider the potential appraisal. A Realtor® uses their years of market experience to help you predict the appraisal price. You want to price your home at a value that’s close to the expected appraisal. Banks want to know the true market value of a home before lending money. When appraisals don’t match the sale price, deals can fall through.
Home pricing is subjective. While formulas are great baselines, you need to add in the human factor.