Most people will begin searching for a new home online and expect the price to be accurate. Home sellers see the estimated online price of their house, which might be far higher than the price you want to list it for, and be determined to list for an unrealistic price. Sound familiar? As we know, computer-generated home pricing is often inaccurate. Help your clients understand online home values and why a professional CMA is so important.
Zillow's Zestimates are popular among home sellers and buyers but how accurate are they? It starts with the data -- if data isn't accurate, the Zestimate isn't accurate. In other words, if Zillow data shows a home has 3 bathrooms instead of 4, the estimated price will be off. The same is true of the square footage, lot size, number of bedrooms, etc. In addition, if an older home hasn't been on the market since it was originally built, the limited amount of historical data will make it difficult for Zillow to accurately price the home.
The value of new construction can be greatly underestimated as well. When a home is being newly constructed in a neighborhood which values its existing homes around $300,000, and a new home goes on the market for $385,000, the Zestimate might only reflect a price slightly above $300,000. A Zestimate like this might lead a home buyer to believe they can make a low-ball offer only to be turned down, without receiving a counteroffer.
The same holds true for home sellers. They may look up their house online to see a high price estimate and want to list at a similar price. When their real estate agent tells them that the house isn't worth nearly that much, owners struggle to accept a lower list price. Helping a home owner understand that accurately pricing their house will improve the likelihood of fewer days on market, the online price will hold less appeal.
User-submitted data can also lead to inaccurate online pricing. Zillow allows users to correct information but the data may or may not be officially updated on their site. Plus, the update might not affect the overall price anyway.
As a Realtor®, you're the expert when it comes to home prices in your client's preferred neighborhoods and a CMA is a great way to illustrate accurate and fair price ranges. Providing a CMA will help clients see the difference between realistic home prices and prices they're seeing online. Point out Zillow's estimated price range to further help them understand how online price can vary greatly. Your pricing expertise will help more than your current clients -- they will share their new found knowledge with friends, potentially earning you more clients.
If you're clients still aren't convinced, after reviewing your CMA, recommend a professional home appraisal. Because a home appraiser does an on-site walkthrough of the home and property, looks at how the neighborhood affects the value of the property, and how the home compares to recent sales in the area, they can provide more details on home pricing.
Home buyers and sellers need to be educated about estimated homes prices on popular websites, like Zillow. You're the neighborhood expert and providing a CMA will best illustrate what a home is truly worth. If clients still aren't convinced, recommend a professional home appraisal. With your level of expertise, you can help clients understand and overcome pricing concerns brought on by online pricing, and find a fair price whether they're buying or selling.