Jay Evan Schoenfeldt | May 7th, 2021

 

Last week I had a few friends over for a socially responsible outdoor dinner. It wasn’t long before the conversation turned to real estate. My friends asked me if Zillow’s Zestimate® automated home valuation tool produced accurate valuations. I thought it was a great question. Here are my thoughts...

 

Zillow’s Zestimate feature estimates the value of homes across the country. It works best when nearby homes and neighborhoods are of similar age and style without large degrees of differences among neighboring properties. It produces an estimated value based on a proprietary algorithm which includes data available through public records, online listing information and relies on homeowners to input data like their property’s features. Zillow is relying on the accuracy of a homeowner’s entry and it’s not uncommon for public record information to be a month or longer behind real-time.  In short, Zillow’s estimate is only as good as the data it has available to process.

 

In a densely populated city like Los Angeles, there is often a broad spectrum of homes next to one another with large variances in square footage, age, condition, permitted/unpermitted square footage, and neighborhood pockets that can change drastically from one side of the street to the other.  It is not unusual for homes to have garages converted to guest houses. Homes on the same block could have completely different views or no view depending on how they are situated on the lot; none of this can be recognized by Zillow’s algorithm.

 

Then, there are emotional attributes a prospective buyer feels when they enter a home; the level of finishes, designer furnishings, architectural integrity and the functionality of the interior space. Again, none of these attributes are recognizable in an algorithm because it takes being there, in real life, to recognize them.

 

Zillow is an important tool to use for research and better understand an approximate value, but should never be relied on exclusively to determine price. A Zestimate should be used in combination with the eyes of an experienced Realtor® who tours your property in real life. Realtors recognize what home features are valuable to prospective buyers in your area. They understand how some areas of a neighborhood are valued relative to one another. Their experience goes a long way and could keep you from leaving money on the table as a seller or making a poor financial decision as a buyer.

 

If you are embarking on the process of buying or selling a property in Los Angeles, use every tool at your disposal. But when it comes time to buy or sell, consult a real estate professional with the expertise and track record to help you maximize the value of your home or buy one at the right price.