Whether you’re a seller or a buyer, getting an accurate estimate of your home’s value is important.
Beau Piorkowski, an agent with the Core Real Estate Team, says he sees too many clients who rely solely on the “jestimate” of their property.
“I’d say the “estimate” of this house is off by $20,000 or 25,000, which is not a small chunk of change,” Piorkowski said of one property.
What you need to know
- “Zestimate” is an online tool from Zillow that estimates the market value of a home
- The tool uses a proprietary formula including public and user-submitted data
- Nationwide, its average error rate for on-market homes is 1.9%, meaning that half of the homes on the market “guestimates” are within 2% of the final sales price.
Zillow’s “Gestimate” is a computer-generated tool that provides an estimate of a home’s market value.
“The number of homes within 0.3 miles of similar square footage, beds and baths that have recently sold for this price and your home’s price will tweak based on comparable sales and value,” Piorkowski said.
The algorithm is based on public and user-submitted data and factors in location and market conditions. However, there are several factors that online estimates such as Redfin or Realtor.com do not pick up.
“[C]Condition, some home amenities, upgrades, appliances. There are many things the computer doesn’t see,” Piorkowski said.
So far this year, Zillow’s online tool has appraised more than 100 million homes. Its average error rate nationwide is 1.9%, meaning that half of all homes on the market are within 2% of the “estimate” final sales price.
But the tool is just a starting point, the site says; Homeowners should consult with a real estate agent or appraiser for an accurate estimate.
“Especially in the Capital Region, with my personal past sales, $30,000, $40,000, $50,000 off,” Piorkowski said.
While some people are relieved to find that their home is worth more than they imagined, there is a flip side to it, which can lead to awkward conversations with the home owner.
“The computer doesn’t factor in being at a busy intersection, neighbors are close, it affects value in a negative way,” Piorkowski said.
In this unpredictable housing market, Piorkowski says, find an agent who knows the area well, and if you don’t have extra cash for repairs, working with what you have will go a long way.