By Chad Taylor
Question: How do I know how much my home is worth? Can Zillow, Trulia, or the county tax assessment give me an idea of value?
I have answered this question numerous times over the last few weeks. As the real estate market is gearing up, it seems that sellers fear under-pricing their home and buyers don’t want to overpay. It is like a dance between the two sides, with both parties focused on the same thing: sales price. Sellers and buyers alike seek out as much information as possible when they begin the process of either selling or purchasing a home. And all of them start their research online.
Now for those two dirty “six letter words”: Trulia and Zillow. As a Realtor, I love the syndication (online exposure) that our listings receive on websites such as Trulia and Zillow. The more exposure our sellers receive the better in my book. However, the valuation models on Trulia and the “Zestimates” on Zillow are HIGHLY inaccurate. Kansas and Missouri operate as “closed record” states, meaning data on sold properties is not shared with the open market. That data is only shared with the Realtor community and tax entities. In some parts of the country, Trulia and Zillow are highly accurate — but those are areas with “open record” laws. In closed record states, Trulia and Zillow use tax appraisals for valuation. Again, in our market, the tax appraisals are inaccurate. Some are higher than market value, some are lower.
Think about it this way: When was the last time a Johnson County or Jackson County tax official was actually in your home? NEVER. The counties do their best to keep up with the market, but the market is a moving target.
When you think of Trulia and Zillow in our market, I want you to think of them like Web MD. If you are a bit of a hypochondriac, like me, or if you have kids then you have more than likely “Googled” a symptom or two. And like Trulia or Zillow, you can get some good information from Web MD. But in most cases, even the slightest of symptoms, can quickly lead to a terminal illness on Web MD because they are covering all of their bases and working with the limited information that you provided them. In this comparison, Zillow and Trulia are doing the same. They are working with very limited information and although some of the info, like neighborhood stats, can be useful, the overall diagnosis (fair market value, or Zestimate, or whatever goofy name they choose) can easily lead to an extreme outcome. And the extreme outcome could be grossly mispricing your home.
Regardless of whether we are in a seller’s market or a buyer’s market, the same real estate rules still (and always) apply. A home is only worth what a buyer will pay for it and what a seller is willing to sell it for. After that, if a mortgage is being obtained, the buyer’s lender will then appraise the home to ensure that it is worth the purchase price. In this appraisal, the appraiser will use comparable closed sales (from the last six months) and pending sales in the immediate area to establish a fair market value for the home. That value must be equal to or greater than the sales price. These closed and pending sales are the most accurate system for establishing “fair market value.”
In a lot of ways, the real estate market is like the stock market. Just as a stock can be worth a certain value one day and a different value the next, a home’s value can do the same. Sold comparables around your home can bring the value up in an inclining market, and distressed properties (short sales and foreclosures) can bring it down. It takes a full-time professional Realtor to confidently interpret market value. You just can’t beat the first-hand experience of being in and out of homes all day.
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.
FAQs
While Zillow and Trulia can both estimate the value of a home, these estimates are no substitute for a professional home appraisal.
How accurate is Zillow Home Estimate value? ›
How accurate is the Zestimate? The nationwide median error rate for the Zestimate for on-market homes is 2.4%, while the Zestimate for off-market homes has a median error rate of 7.49%. The Zestimate's accuracy depends on the availability of data in a home's area.
How accurate is Trulia Home values? ›
In some parts of the country, Trulia and Zillow are highly accurate — but those are areas with “open record” laws. In closed record states, Trulia and Zillow use tax appraisals for valuation. Again, in our market, the tax appraisals are inaccurate. Some are higher than market value, some are lower.
Which website is most accurate for home value? ›
Zillow. Zillow's Zestimate is one of the best-known home value estimators out there, and like many of its competitors, all you need to use it is the home's address. Per the company's website, the median error rate is 3.2 percent for on-market homes and 7.52 percent for off-market homes.
How do you find out what your home is really worth? ›
- Use online valuation tools.
- Use the FHFA House Price Index Calculator.
- Get a comparative market analysis.
- Hire a professional appraiser.
- Evaluate comparable properties.
There are several reasons why Zillow's Zestimate may be inaccurate. For one, the feature relies heavily on publicly available data, such as property tax records and past sales data. This means that it may not take into account certain factors, such as renovations or additions to a home, that could affect its value.
Is Zillow zestimate close to appraisal? ›
Is Zestimate the Same As an Appraisal? No, it isn't. Zillow tries to be clear about that. Zestimate provides a general idea of a home's value based on the information that the Zestimate model has to calculate it.
Is Redfin more accurate than Zillow? ›
According to Redfin, they say their estimates are much more accurate than Zillow. Half of homes that sold came within 2.1% of the Redfin estimate. The other 50% were much further off. Similar to Zillow, 97% of homes that sold came within 20% of their estimate.
How safe is Trulia? ›
Trulia has an entire team dedicated to reviewing rental properties and double checking listing feeds. There is an automated algorithm that scores listings based on historical data and removes listings most likely to be fraudulent. New accounts and listings are verified to have a valid U.S. phone number and IP address.
How accurate is Redfin vs Zillow? ›
Redfin's home value estimator median error rates are about 0.3% more accurate than Zillow's, so in practice, the two estimates are practically equal. However, Zillow doesn't publicly update its accuracy or error margins as frequently as Redfin. Zillow last updated its accuracy numbers on April 27, 2023.
Best for Home Values Trulia
The app is free for users and earns high reviews. Trulia allows users to view a property in multiple ways.
Which property valuation is most accurate? ›
Next, when you have your heart set on a property and you're sure it's the right one, it's a good idea to buy a valuation from a registered valuer. This is the most accurate estimate of a property's value available, and will most likely be required by your lender anyway.
How accurate are online appraisals? ›
Online home appraisals, while a helpful starting point, might not capture the nuances of a specific property accurately. The algorithms used by these platforms rely on historical data and may not account for unique features or recent upgrades that can significantly impact a home's value.
How can I increase the value of my home by $50000? ›
Home improvements that improve value can include:
- Landscape Layout. Landscaping should be welcoming, well-kept, and easy to maintain. ...
- Front Door Updates. A fresh coat of paint or modern door style elevates the entryway.
- Outdoor Lighting. ...
- Driveways and Walkways. ...
- Replace the Garage Doors.
Home sellers often prefer to work with buyers who make at least a 20% down payment. A bigger down payment is a strong signal that your finances are in order, so you may have an easier time getting a mortgage. This can give you an edge over other buyers, especially when the home is in a hot market.
How much equity does my house have? ›
Take your home's value, and then subtract all amounts that are owed on that property. The difference is the amount of equity you have. For example, if you have a property worth $400,000, and the total mortgage balances owed on the property are $200,000, then you have a total of $200,000 in equity.
Are Zillow estimates usually higher or lower? ›
If you ask Zillow, the Zestimate you see on your house or any house you are looking at is very accurate. They have a self-published nationwide median error rate of 2.4% for on-market properties and a 7.49% median error rate for off-market properties.
How accurate is Zillow Zestimate compared to appraisal? ›
How Accurate Is a Zestimate? If you ask Zillow, it's very accurate. In fact, Zillow boasts a “nationwide median error rate” for on-market homes of 2.4%. However, for off-market homes, the error rate is more than three times that rate, coming in at 7.49%.
Is zestimate close to appraisal? ›
Zestimates are mere estimates of a property's value, not a true valuation. As such, you can expect your Zestimate to be around your home's value, but don't expect it to be exact.
Is Zillow square footage accurate? ›
The Zestimate's accuracy depends on location and the availability of data in an area. Some areas have more detailed home information available — such as square footage and number of bedrooms or bathrooms — and other areas do not. The more data available, the more accurate the Zestimate value will be.
