It’s tempting to accept the prices spit out by private real estate websites - Zillow is one of many - but remember that those figures are simply estimates. But if they’re not, the buyer and seller may have to renegotiate the price. In those cases, some appraisers are willing to accept additional information about the local market and revise their valuation, Burr says.
In a rapidly appreciating market, it’s not unusual for an appraisal to come in below the price a buyer is willing to pay. Your lender will require an appraisal when you take out a mortgage - and sometimes for a refinance - to ensure the house or condo is worth the amount you want to borrow.Īn appraiser examines the home and studies market trends, along with other factors such as location and whether the house is in a flood zone. “But because the marketplace is so familiar with Zestimates, it often would be discussed relative to what buyers’ expectations of a property might be.” Get an appraisal “I don’t know any seasoned agents who depend on the Zestimate for a pricing recommendation,” Burr tells MoneyWise. Good realtors analyze recent similar property sales to recommend a list price, says Corey Burr of TTR Sotheby's International Realty in Washington, D.C. Your real estate agent must know your neighborhood. The best ways to determine a home’s value “Zillow Offers appears to have made both mistakes and done so at a large enough scale to result in hundreds of millions of dollars of losses,” Sharga writes. Rick Sharga, an executive with RealtyTrac, says Zillow’s business model was flawed, noting on his company’s site that house-flipping investors often pay too much and underestimate the time and cost to ready a home to sell. Indeed, an unexpected desire for new housing by work-from-home Americans, combined with ultralow mortgage rates, drove U.S.
In a quarterly earnings call, CEO Rich Barton said Zillow was unable to correctly forecast future home prices amid volatility in the pandemic-driven housing frenzy. The company recently announced that it was exiting the iBuying business. Zillow was so confident in its pricing algorithm that it said earlier this year its Zestimates would serve as the initial offer price on eligible homes. In 2019, Seattle-based Zillow launched its iBuyer business, called Zillow Offers, to purchase homes directly from owners, make repairs and put them back on the market.