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Zesty Estimate of Home Value

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Posted 07-08-2013 at 09:06 AM by Roy Sanborn

Zesty Estimate of Home Value

There were 1208 residential single family homes for sale in the twelve area towns covered by this report as of July 1. The average asking price was $496,188 with a median asking price point of $259,948. That means that there are slightly over 600 homes available under $260K so there are plenty of affordable homes out there as the summer sales season kicks into gear. Our current inventory level represents a 15.4 month supply of homes available compared to the 18 month supply we had last July.

In the wonderful world of real estate, the website with the most amount of traffic is Zillow. It has over 15 million unique monthly visitors per month! Zillow lists not only homes for sale by real estate agents, but also homes for sale by owner, foreclosures, and rentals. It claims to have over a million listings on the site but I didn’t count them.

Like most real estate websites, Zillow has a lot of information on it including area demographics, school information, home buying and selling advice, and mortgage information. It can help you find a real estate agent and even lists home service providers in your area. One feature I liked was that the site shows pictures of remodeled rooms and provides estimated costs to construct. It’s a good place to get some remodeling ideas if you are looking to improve your property…

The site also provides “Zestimates” which immediately made me think of an advertisement for as zesty ranch salad dressing. But no, it is a “zesty estimate” of your home’s value in todays marketplace. That’s pretty amazing considering Zillow has never seen your home. Zillow relies on tax information as being correct which we know isn’t always the case. And the tax information doesn’t necessarily give a true picture of the quality and condition of a home. Therein lies the problem. Sometime buyers and sellers rely on this information as being gospel, true, and accurate. I think most people would agree that it is pretty hard to give the true value of a home without seeing it in person. Heck, it is even difficult for agents and appraisers that have actually been to a home to value it when there have been very few sales in an area to utilize as comparable properties.

Zillow bases its Zestimates on information it has electronically gathered and compares it to other properties that have sold in the area. I guess there is a secret algorithm or two involved as well, but it is mostly utilizing averages. The accuracy of these Zestimates is actually scored on the website if you look far enough to find it. In areas where there is a lot of data, sales, and where homes might be a little more cookie cutter (not sure where that is, though) the accuracy improves.

Zillow has a four star rating system to denote the accuracy of the Zestimates. The best, or four stars, denotes that a high percentage of the Zestimates done for the transactions in any given area were within 5% of the sales price. Three stars would mean they were within 10% of the sales price and two stars means within 20%. No star means they couldn’t do an area due to lack of info.In places like good old NH the accuracy is a little less.

Belknap County has a two star rating. The Zestimates here were within 5% of the actual sales price only 21% of the time. They were within 10% of the correct sales price 40.6% of the time and within 20% of the correct price 69% of the time. Conversely this means that 79% of the time they were more that 5% of the correct price, 60% of the time they were off by more 10%, and 31% of the time they were off by more than 20%.

The accuracy of the Zestimates was better in Southern NH with Sullivan County doing the best with a four star rating where 35% of the time the estimates came in with 5% of the sales prices. Strafford, Rockingham, and Hillsboro Counties all rated three stars.

So what does this all mean? Don’t rely too heavily on the price estimates in Zillow, particularly if you are buying a property. Rely on the advice of a zesty real estate agent that knows the market and can advise you on the property based on his knowledge of the comparable properties he has seen. Also, if you are selling your home you should go in and check the value listed for your property. You can claim your listing so that you can correct errors, add info about improvements, and comments about your property to perhaps improve the value shown for your home. Now that’s really kinda zesty isn’t it?

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