Why determining Home Value Is So Important!
When selling your home, one of the most important decisions you will make is setting the sales price. To set an optimum sales price, you must first determine your home’s value in the current market. The worst mistake you can make is to use a predictive program to “estimate” your home’s value…. Especially in Texas!
Lets Take A Look At Why
There are several automated home valuation programs in use, but lets take a look at Zillow and Trulia’s “Zestimate” which is probably the most popular and most often encountered on the internet and in social media. (FYI: Zillow owns Trulia)
First Consider the The Business Model
Pure and simple, the primary goal of these automated home valuation programs is to collect the contact information of potential home sellers and then sell those leads to Real Estate agents. It’s how they make money.
It doesn’t matter to them how accurate or usable the resulting home value estimate is, because in the end they simply sell your contact information to a real estate agent, which isn’t necessarily the best agent for you!
Also, Its An Accuracy Issue . . . Especially In Texas
The most important issue is the accuracy of these automated home value programs. In addition to extremely talented and knowledgable programmers, all predictive applications require accurate historical data in order to predict accurate results. That is just a fact! From a predictive application standpoint, the actual historical sale prices of similar homes in the area are critical to estimating a homes current market value.
And that’s the rub!
Texas and other “Non-Disclosure” states (see list below), do not share home sales amounts with anyone! The direct result is that predictive home value applications, which reliy on this critical data element, will be woefully inaccurate!
What is the Impact of an Inaccurate Home Value Estimate?
Well, in a nutshell, there is no “Best Case”! Remember, you are using this information to help set the sales price for your home. Relying on an inaccurate home value estimate means just one of two things. You either price your home too low, in which case it probably sells quickly, but you leave a bunch of money on the table. OR… You price your home too high which may result in it selling slowly, if at all, and potentially excluding a certain segment of buyers that may not even look in that price range. This may increase the number of “days on market” to a point where it could negatively impact the actual value of your home.
How Accurate is Zestimate?
(Web Link – Click Chart Below > Click “National”)
Their website says “Nationally, the Zestimate has a median error rate of 5.4%, which means half of the Zestimates in an area are closer than the error percentage and half are farther off. Be aware that in some areas, we might not be able to produce a Zestimate at all”
The chart shows that nationally, 70% of their home value zestimates are within 10% of the actual sales price. Being within 10% on a $300,000 home means you could be off up to plus or minus $30,000 dollars! (not counting their 5.4% error rate)
But what about the other 30% of their estimates? Can you afford or be willing to be off more than 10%? How about 20%? That would be plus or minus $60,000. Could you live with that?
But what about Texas Accuracy?
(Web Link – Click Chart Below > Click “States/Counties” > Scroll to Texas)
For Texas overall, One Star = Tax Assessor’s value or unable to compute. (Note that there are no values for any of the % of Sale Price columns.)
What about Williamson County?
(Web Link – Click Chart Below > Scroll to Williamson Co.)
For Williamson County, One Star = Tax Assessor’s value or unable to compute. (Note that there are no values for any of the % of Sale Price columns.)
The Bottom Line!
What Does All This Mean To You?
The bottom line is don’t trust an automated application to estimate your homes value, especially if you live in a “Non-Disclosure” state like Texas! Save yourself a lot of heartache, if not actual money, and only use a Licensed Real Estate agent to perform a Comparative Market Analysis on your home to determine its worth on the current market.
Give Me a Call – I Can Help!
If you would like me to help you determine what your home is worth on the current market, call or text me at (512) 966-7595, or just click the link below, and I will prepare a Comparative Market Analysis for you.
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Other Supporting Data & Links
List of Zestimate Non Disclosure States
“The following states are considered non-disclosure: Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah, and Wyoming.” “If you live in any of the above states, at least you now know why we don’t currently have sales records in your area.”
Zillow Star Accuracy Rating Chart
(Web Link – Click Chart Below)