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Zillow and their Zestimate

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Dear Phyllis,

I am a long-time reader of your real estate column and don’t believe you have discussed Zillow and their “zestimates”. I often check our La Canada home’s value on Zillow and don’t understand the wild fluctuations in value. Last week my “Zestimate” dropped $50,000. As we aren’t selling anytime in the near future, I suppose it doesn’t matter. But I am hoping you can bring some clarity to Zillow and their “Zestimate”.


Dear Confused,

Zillow is very popular with homeowners as values escalate because it’s great fun to dream about our ever-increasing equity. As a Realtor®, I spend a lot of time explaining these different online pricing valuations to clients. Zillow zestimates do not reflect the actual value of your home and are only an estimated valuation.

These zestimates are computer-generated estimates based on public information such as square footage, lot size; year built, number of bedrooms and bathrooms, etc. Zillow does not know if you spent $150,000 on a remodel; they don’t know if you have tandem bedrooms; they don’t know if your La Canada home is located in the La Canada school district or if you are across the street from high tension lines. Zillow does not personally view your home; it is a computer algorithm that analyzes data.

In our current real estate market, many homes are selling quickly in multiple offer situations and often over the asking price. Online home valuations are based on past sales. As real estate values continue to increase, past sales are a lesser indicator of current values. Zillow does not yet know that the home across the street from you is in escrow for $50,000 over asking price. When evaluating a home’s worth, I also take into consideration active and in-escrow listings, not just recent sales. A comparable market analysis from a local real estate agent is the best way to determine your home’s market value (what a buyer would be willing to pay).

So continue to enjoy Zillow and other online valuations, but just don’t take them too seriously.

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