Regardless of your sentiment about the internet behemoth, Zillow took the real estate industry to a whole new level. Coveted data that had previously been exclusive to real estate professionals is now available for the common consumer or the curious looky-loo.
It has become a supplemental part of our profession, whether we like it or not. Honestly, it would be a Christmas miracle if you had a client who had never visited Zillow at one time or another.
Some people believe that real estate marketplaces, such as Zillow, are the beginning of the end for real estate agents.
I disagree. Just like every other industry in the world, real estate has to evolve. We have to embrace technology, and Zillow is just one piece of technology that agents have to adapt to.
Although Zillow might be the bane of a real estate agent’s existence, it does provide consumers with access to data and can be a convenient source of information.
According to Zillow’s website, “The Zestimate home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location and market conditions.”
The problem is that consumers see a price tag attached to their property and without fully understanding, they set their heart on that number. As real estate agents, we know better, and we often have the difficult task of having to tell our clients that their home might not actually be worth what the Zestimate is reporting.
Although telling clients things they don’t want to hear is a common part of our job, there are ways to cushion these blows.
After all, it’s not our fault their home isn’t worth what an arbitrary formula spits out. When you approach situations like this with facts, clarity and confidence, you will be saving you and your clients a lot of stress in the long run.
Here’s a few things that will help you better explain Zestimates to your client:
1. First and foremost, Zestimates is not an appraisal
The data is based on the home’s physical attributes, tax information and previous sale records. Zestimates do not know if the kitchen has upgraded commercial appliances or is home to 25 indoor cats; these things can definitely affect the value of the property both negatively and positively.
2. Get familiar with the fine print
Zillow’s FAQs clearly explain that nationally, Zestimates are currently within 20 percent of the final sale price 82.5 percent of the time. This means that a Zestimate could be 20 percent higher or lower than a home’s actual value. That’s a pretty significant margin of error.
3. Show clients your research (you’ve done your research, right?)
Show them the CMA and explain what factors are causing the Zestimate to be inaccurate (or in some cases, accurate).
4. If the Zestimate is higher than the market value of the home, explain the outcomes
The longer the home sits on the market, the more likely buyers will wonder what’s wrong with it. Additionally, if you do get an offer for a home that is priced above market value, a bank is unlikely to loan more money than the home is worth.
5. Give your clients some options such as an automatic price reduction
If the home doesn’t get any offers in a certain amount of time, the price will automatically be reduced until it’s at market value.
It’s important that your clients list their home as accurately as possible. This is not an opportunity to test out the market. If you do, the market will test you out, and sadly, you will lose.
Although Zillow and Zestimates have helped increase real estate awareness, it’s important to remember that when it comes to the value of a home, you are smarter than a computer. You eat, sleep and breathe real estate. Your client hired you because you are the real estate expert, and you need to articulate that you are the professional.