In a day and age where prices just keep going up and up, the word “Zestimate” has become a pretty commonly used word. “My Zestimate says that my home is now worth 120K more than when I bought it,” you might hear from a friend, or “According to my Zestimate, I could sell for 20K more than I could just last month if I decided to move!” But, how much credibility does a Zestimate have? As an agent who does at least 5-10 CMAs a week, I wanted to take a moment to talk about my perspective about the flaws and the benefits of the Zestimate as it relates to the knowledge you need to sell your home.

Zestimates can be manually changed.

Frequently, when we list homes, we have clients that ask us if they should change the Zestimate because it doesn’t exactly align with our list price. The answer is that it’s totally up to you, and at the end of the day, it’s almost certainly not going to impact your sales price because agents pull CMAs rather than Zestimates. The fact that you are able to manually change your Zestimate, which then will affect your local Zestimates means that if your neighbors are manually deflating or inflating yours, if you take your Zestimate to heart, you may be off by a large degree when calculating how much your house might sell for. 

Zestimates have a larger margin of error in Georgia compared to other states.

According to data published in 2019 by the Academy of Real Estate, in Atlanta, GA only 85.6% of Zestimates were within 5% of the sale price. With an average sales price of $359,275, that means that approximately 15% of homes are around $18,000 off from the value, and that was before the market even truly took off. Zillow recently claimed that its range of error is around 1.9%. With a Cherokee County average of 405K sales price, that’s around 8K of a standard of error if you’re lucky and there isn’t something specific or different about your home that makes it difficult to quantify. This margin of error also tends to increase more in Georgia due to point number three, which could get you a margin of error that looks much closer to 30K-50K or so, especially if you’re on a basement or backing up to a golf course or something unique. 

Zestimates pull from county records, which often have incorrectly inputed info.

When the Academy of Real Estate did their research on the Zestimate in 2019, they had a much higher margin of error in Georgia than many of the other cities they studied. Why? While there were several elements, one of the major reasons is the frequent presence of basements in Georgia compared to other states. Because of the presence of these basements, the county records that Zillow pulls from are not always accurate with the amount of square footage that is above and below ground. These two are not counted with the same weight, so this can create a huge discrepancy. For example, if the previous agent inputted a listing saying that a house had 4,600 square foot, but the more you investigate, you find that it was actually only a 2,300 foot ranch on a full unfinished basement, the Zestimate on your house is going to have a serious miscalculation because it’s pulling from incorrect data. After all, even the best formula in the world is only as good as the information it’s using to calculate its answer. 

What a home is “worth” is often not what it will sell for in today’s market.

Because the market has become so wildly competitive in the last few years, elements such as appraisal gaps and waived appraisals have caused people to frequently pay above what a house is worth according to an appraiser. Because of this, what your house may be “worth,” even if the Zestimate is exactly on track, may not actually be what your agent would advise that you list at in order to create the best possible financial outcome for you. Since they deal with the market every day, they are going to help you price strategically so that you can get the most money based on the way that buyers in your market will respond to your house. 

The Zestimate doesn’t take into account upgrades or special circumstances that can be seen in person.

Whether you’re the kind of person who has put $100,000 into your house or someone who will let your house fall apart around you before ever lifting a finger to update or improve it, your Zestimate is almost certainly not going to take this into account when estimating your value. After all, they have no way of knowing what you’ve done to your house unless you’ve been truly on top of getting all of the permits filed for any work that has been done with the county. Even then, if your neighbors haven’t, and the Zestimate is using houses around you that aren’t at the same level of renovation as yours, they are almost certainly going to be incorrect with your number. 

At the end of the day, feel free to take a look at your Zestimate, but never make the mistake of treating it as gospel. While Zillow’s formula doesn’t seem to be a bad one and has a good bit going for it, it’s not going to be correct unless the county data it’s pulling from is absolutely, unequivocally correct, which is almost never going to happen. Still, as long as you’re okay working with that margin of error, it might be useful to keep an eye on it and then loop your agent in once you’re actually ready to get a true idea of what your house might sell for in today’s market. If you have any questions at all about this topic or about the buying and selling process in general, please reach out by sending us a text or giving us a call at (678) 242-9981 or sending us a message through the red messenger icon. We can’t wait to hear from you and help answer any questions you have.