There is an old saying: “your home is worth what someone is willing to buy it for.” It is very true because in real life there are many different factors, some arbitrary that go into the valuing of a home.
In today’s internet based world, people tend to look to industry leader Zillow for information. But the questions is, “Should I Trust Zillow to Determine My House Value in McAllen?”
No.
Don’t trust Zillow for valuing your home. This is why:
Should I Trust Zillow to Determine My House Value in McAllen and South Texas
Zillow’s Margin for Error
It has been reported that Zillow’s algorithm in different cities and neighborhoods averages between 18 to 20 percent higher or lower when it comes to home estimates. There are even reports of home values on Zillow climbing in declining market areas. Guess why Zillow withdew from the home buying business?
Let’s think about this for a second. For a $200,000 home, a 20 percent change will be $40,000. For higher-priced markets like Austin or Boston, a $1 million home could see unrealistic estimations varying from $180,000 to $200,000 or more. That’s a huge difference in pricing.
Zillow estimates could make some potential buyers think that they cannot afford certain properties while giving sellers an unrealistic idea of a selling price point.This situation often is the starting point of many disagreements homeowners are having with selling agents regarding properly pricing a home.
Simply put: homeowners see the price on Zillow and think that is the starting point for their home.
How Does Zillow Create Estimates
Zillow calls its estimating tool a “Zestimate.” Even with all the pricing factors placed into the formula, there is still a high margin of error because Zillow isn’t actually looking at your home. They don’t know how does the property look inside and how does your street compare to the next one. It is a mathematical and statistical formula that not always works out in real life situations.
The proprietary formula looks at some public records from Hidalgo County Tax Records and past sales reported the market pricing in the area. It will factor in the size of the house, the lot and all features of the home including the number of bedrooms, bathrooms, pools and highlighted features. However, even Zillow will tell you that this is a starting point for a true valuation of your home and should not be considered an appraisal or true value.
The reason is the information Zillow uses is reliant on accessing public records and user input such as realtor sales. However, Zillow cannot know if your home is the “ugly house in the block” or the completely renovated and upgraded home everyone desires.
Additionally, Zillow doesn’t understand specific neighborhoods or even streets. These are very common in larger cities where you can have higher end houses just few blocks from a mid or lower-end ones. These “pockets” can skew or be skewed by larger metro data that Zillow factors in that aren’t pertinent.
The More Accurate Model
Any professional realtor will tell you that pricing a home to sell requires a full understanding of the home itself, the location and current real estate market in the area. In fact, most realtors look at Zillow pricing with a bit of disdain because it does make pricing and managing realistic client expectation more difficult.
A realtor will take a look at sales in the area, creating a radius based on your pocket rather than an entire zip code. You need to compare apples to apples, thus will have to find comparable houses. That means, he will then compare your home based on size, features, and upgrades to those homes that were recently sold, thus appraised, in the previous 3 to 6 months. This range is contingent on how hot the real estate market is in the area.
He will then compare this information to existing homes on the market, looking at how your home compares to what else buyers are seeing on the market and how much they are willing to pay. After all, if yours is a well-kept home being sold next to a completely remodeled home, you might not be able to get the same price per square foot .
Additionally, realtors will consider whether it is a buyer’s or seller’s market. If you want to create a magnet with a lot of eyes on your property in a seller’s market, you can slightly underprice the home and let the bidding begin. This tactic works in many markets including McAllen.