As a society we are enamored with tools that allow us to immediately find out what our home might be worth. The most popular of these is the Zillow home price tool (the Zestimate), which is where a large majority of prospective home sellers start their research.
Zillow’s margin of error has been cut down to a 5% median error rate, and while this is impressive for an automated tool, in areas where home prices are higher this margin is significant. Where we live, a 5% margin of error leads to a wide potential spectrum of home prices.
For example, if the Zillow home price is estimated at $750,000, the margin of error could be as high as $37,500 in either direction. For a $1.5 Million home, it could be $75,000 in either direction.
When you’re pricing a home for sale, what matters is where you position your home’s price within that 5% margin of error. Knowing that a home’s value is somewhere between $1,425,000 and $1,575,000 does a seller absolutely no good in determining what the listing price of their home should be.
So how does a seller know where along that spectrum to price their home for sale? As always, it comes down to factors that an automated program is not able to take into account. Here are three of the most important factors:
- The overall quality of the home in terms of design, construction, materials used, etc, as well as the condition of the home – When was the home built? What kind of insulation was used? What is the condition of the exterior siding or brick? Is the plumbing and electric in good repair?
- The particulars of the home’s location in a neighborhood – Is it on a desirable street for that neighborhood? Is the home positioned in a spot that allows easy access to neighborhood amenities such as parks, trails, etc. Or is the street used as a cut through, with a high volume of speedy traffic?
- The facts on the ground – What is the sum of all of the individual aspects of a particular home, and how does this sum total compare to other homes for sale in the immediate area?
The above three factors are not the only thing that tools like the Zillow home price estimate fail to take into account, but they are the three most important in my mind, because they are what could be called the quality side of a home. Zillow home price estimates, as good as they are, can be their very nature only evaluated the quantitative side of the equation. That’s why it’s so important to find the right partner to help you sell your home.
If you’re interested in talking about what qualities your home possesses, or anything else related to home values, please get in touch with me anytime:
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