Why Did Zillow Knock Down My Value?
If you woke up this morning noticing that Zillow dropped the value of your home by $90,000 since yesterday, you may not be the only one. But hang tight; it may bump you up $120,000 next month. I'm not suggesting that Zillow values are bogus or inaccurate, but you need to understand what's going on. The Zillow algorithm is an amazing tool to measure basic geographic sales activity in quarter-mile ranges. It is also ZIP code-conscious, and it factors in square footage and land size as criteria for comparative analysis to determine value.
What if your lot is 8,000 square feet, all flat and usable, but your neighbor's lot, which was used as a comparable, is 13,000 square feet on a hillside with only 5,000 feet flat and usable? What happens? Zillow likely wouldn't be able to sort out those differences and might overvalue your neighbor's property or undervalue yours. What if your property is one house from the freeway and a comparable is close by and in the same ZIP code but 1.5 blocks from the freeway? Same thing.
Let's suppose three very different homes sell in the same 30-day period. Home No. 1 is a fixer-upper on a busy street, with a poor floor plan. Home No. 2 has a steep hill in the rear and only a small patio for a yard. Home No. 3 was sold privately, off market to a developer and is now tagged for demolition. Zillow only knows the basic criteria, not all those details, and based on these three sales, it would probably calculate that the market has dropped. As a result, even though your home has, say, new landscaping, a beautiful year-old kitchen, new wiring, a studio/media room with the best surround sound and French doors opening to a fabulous deck, the three other sales could cause Zillow to zap your home's price estimate. Does your home have a view? Oops, Zillow might forget to add value for that, too.
Moral of the story: Have your home estimated by either an appraiser or a knowledgeable real estate agent.
What If I Sell and Wish I Hadn't?
People often think for a long time before pulling the trigger and selling their home. Most people are very pleased with the results and wish they had done it much sooner. But there are always exceptions. Sometimes people make a big move somewhere with totally different weather or a totally different environment. Imagine moving from Southern California to the desert or the mountains. If you are prepared, great; however, if things don't work out, maybe you will consider going back. It would be difficult to go back and find a home at an affordable price.
If you are not sure whether you want to sell, you might want to lease your house or leave it empty for a year to keep your options open while you experience your new adventure. Go to the limit and live your dream. Usually, after a year, you will decide it is great and be glad you did it, or decide relocating is just not for you and want to go back.
Put your needs first, and take the time to make sure a move makes sense.
For more information, please call Ron Wynn at 310-963-9944, or email him at Ron@RonWynn.com. To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.Copyright 2021 Creators Syndicate, Inc.