Real estate website Zillow.com and its home value estimations, or Zestimates, are here to stay, regardless of how real estate agents and brokers feel about them.
In fact, according to Tyler Smith, founder and CEO of SkySlope, Zillow has taken the real estate industry “to a whole new level.”
“It has become a supplemental part of our profession, whether we like it or not,” Smith wrote in an article on Inman.com. “Honestly, it would be a Christmas miracle if you had a client who had never visited Zillow at one time or another.”
Those clients who look at homes on Zillow often believe Zestimates are an actual appraisal of the property’s value, while real estate agents know they are not. Smith’s article offered tips that make it easy to explain Zestimates to your client.
First and foremost, Zestimates is not an appraisal — The data is based on the home’s physical attributes, tax information and previous sale records, Smith wrote.
Get familiar with the fine print — According to Zillow, its Zestimates are “currently” within 20% of the final sale price more than 80% of the time. In other words, they can be 20% higher or 20% lower than the actual value of the home.
Show clients your research — Smith suggested showing clients the competitive market analyses and explain which factors make the Zestimate either accurate or inaccurate.
If the Zestimate is higher than the market value of the home, explain the outcomes — A home that is on the market for a lengthy amount of time will cause potential buyers to wonder what’s wrong with it, according to Smith. In addition, a bank is less likely to loan more money than the home is worth.
Give your clients some options such as an automatic price reduction — Smith suggested offering an automatic price reduction until the price reaches market value if the home doesn’t receive any offers before a certain length of time.
“It’s important that your clients list their home as accurately as possible,” Smith wrote. “This is not an opportunity to test out the market. If you do, the market will test you out, and sadly, you will lose.”
Source: “How to explain a Zestimate to your client,” Inman.com (Aug. 15, 2016)