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- Zillow is one of the most popular real estate sites in the United States, with over 100 million listings.
- Business Insider spoke with real estate experts to get the inside scoop on how to use Zillow best.
- The biggest takeaway is to not rely solely on Zestimates since they’re not always accurate.
- Experts also said Zillow’s agent review function is a valuable tool that can help you find the best agent for your needs.
- Click here for more BI Prime stories.
For millions of Americans, the first step in the house hunting and selling process often begins with going to Zillow, an online real estate database.
It’s no secret why Zillow is a convenient tool. Spend five minutes browsing the website and you’ll find dozens of homes for sale (or rent), plus all the property details you need to know to make the right decision for your living situation and budget. The same is true for sellers: Many look to Zillow first as a way to get a sense of the market in their neighborhood — and to find real estate agents — before deciding to list.
While Zillow aims to offer “one-click shopping” for potential home buyers, real estate experts caution relying too much on the information provided there. It’s a useful resource, but should be just one of many home buyers and sellers look at during the process.
Business Insider spoke with real estate agents across the country to hear what they think about Zillow — and the best way consumers and sellers can use it.
Take Zestimates with a grain of salt
“Even though I am a Zillow Premier Agent, I always tell people, ‘The Zestimate is not zee price,'” said Leslie Turner, broker-in-charge at Maison Real Estate in Charleston, South Carolina.
Zillow’s “Zestimates” feature is a property valuation tool that pulls in both publicly available and user-submitted information — as well as data about the home, location, and market conditions — to generate an estimate of a home’s market value.
Gigi Malek, a real estate agent with Terrace Sothebys’s International Realty in Queens, New York, agreed with Turner.
“Zestimates are a gauge to the market area, but not necessarily accurate,” she said. “A Zestimate is just a starting point, and a more in-depth appraisal by an experienced agent or appraiser is required to get a proper value.”
Malek also pointed out that Zestimates are often less accurate in denser areas. Zillow provides a table that lists the median errors of homes with Zestimates within five, 10, and 20% of sale prices. In more spread-out cities, such as Denver and Phoenix, Zestimates are over 90% accurate and within 5% of the sale price. However, in dense urban areas, including New York City and San Francisco, the accuracy within that same range drops to 80 and 67%, respectively.
Those differences can add up to tens of thousands of dollars.
… especially when they can underestimate a seller’s home value
Buyers aren’t the only ones who look to the Zestimate tool at the start of the process. Many sellers also think a Zestimate can give them a good estimate of what their house might sell for on the market.
To illustrate how a Zestimate can dramatically underprice a home, Brad Le, a real estate agent in Los Gatos, California, shared a recent example:
“I recently had a listing that Zillow valued at around $650,000 in February,” he said. “We listed it at $750,000 in April, and the Zestimate shot up to $750,000. And despite this current crisis we’re in, we ended up with three offers and sold it for $765,000.”
In this case, the home sold for significantly more than the Zestimate, a good thing for the sellers. However, it highlights how relying solely on online valuations and not professional estimates can start the selling process off on the wrong footing, leaving sellers frustrated by the range of offers.
Le advises his sellers to look at online valuation tools, including Zillow, to get an idea of what buyers are looking at since these numbers might not line up. “That way,” he said, “they don’t get too offended if they get a low offer!”
Keep in mind gaps in the listing information
There are times when listings aren’t always completely accurate due to a seller’s agent not updating it with new information, leaving areas blank, or accidentally including incorrect information.
Scott Bierbryer, CEO of Leanprop, a marketing automation tool for real estate brokerages, and a licensed broker, noted that Zillow pulls in data from a variety of sources, including agents, multiple-listing sources, owners, and developers. How often these are updated can vary.
However, that doesn’t mean buyers are stuck.
“To Zillow’s credit, it has become much better at updating its source data over the years. But human error always remains a risk with any data feed,” he shared. “The reliability of Zillow’s listings is only as good as the source. To completely validate a listing, you should check with the originating source.”
To do this, he explained, scroll down to the “Listing provided by” section. You can then reach out to the provider of the listing.
A lack of standardization on public records data across counties compounds the problem. Zillow relies on county-level information from public records, including transaction, tax, and property assessments. However, how the data is processed can vary by state and county, leaving homes just one town over from another with incomplete information. Plus, some counties don’t allow for the release of certain records — not having access to that information can impact the listing.
Look carefully at an agent’s reviews and past experience
On each listing, you can find a list of agents, including the seller’s agent, who is listed first, and then “premier agents,” who pay Zillow for exposure across listings in their zip codes.
For many buyers, this makes it easy to connect with real estate agents in your area. Click on the agent’s name, and you’ll find a profile page that gives details on current listings and past sales, both in a list and map feature, as well as ratings, reviews, and their contact information.
Agent’s profiles have a star rating (out of five) based on customer reviews, the total number of sales they’ve made, and recent transactions, which cover a rolling 365 days. A “Best of Zillow” tag highlights an agent who has high experience scores as rated by the people who have worked with them.
“Zillow is very useful for finding an agent because you can read reviews and see the agent’s past sales,” Turner said. “Read their reviews just like you would read a restaurant’s reviews.”
With Zillow, only buyers and sellers who have communicated or worked directly with an agent can leave a review, which helps remove any concerns of fake or spam reviews on an agent’s page. Zillow also moderates each review to ensure they’re on topic and aren’t from reviewers with potential conflicts of interest, such as the agent’s family members or coworkers.
Le also highlighted sites like Google Reviews, NextDoor, and Yelp as other places to research agents to help buyers get a well-rounded picture
Buyers and sellers want to look for agents that have a lot of reviews as well as high scores. It’s important to check and see their recent activity, too. An agent who is actively listing and selling is going to have far more insights into the market as it stands now compared to one who hasn’t closed a deal in six months.
“Numbers don’t lie,” said Malek. “If you want to work with a top lister or seller, check out the Zillow profiles of agents in your area or the neighborhood you are buying or selling in and see who is the most active.”
Under the “Agent Finder” section of Zillow, both buyers and sellers can search for agent profiles sorted by most active, most recent sales, best local reviews, and most listings.
“Check to see if the agent is part of a group or team where the claims are collective or if the agent is solo and all buys and sells are their own personal work,” Malek said. This can help determine how individual agents are performing, without numbers getting skewed by their whole team.
She also recommended reviewing the types of listings the agent works with, as well as neighborhood and listing price, because it can help you identify their best demographic. “Getting an expert agent in the area, price range, the volume of sales, and top reviews will help turn a stressful experience into a smooth transaction,” she explained.
Small differences can have a big impact on pricing
Zillow primarily builds its estimates off general publicly available information — and while that can work in general, many homes have upgrades that can make it more valuable than its neighbors.
“There are a number of factors Zillow doesn’t account for in order to properly value a home,” Le said. “Things like the interior upgrades, the exact location of a home on a particular street — is it next to a busy road or at a T-intersection? — the floor or view of a condo, and most importantly, the demand.”
In a market like Turner’s, there can be a huge difference in home styles and ages, which makes it hard for Zillow to create accurate pricing.
“In my market in downtown Charleston, the century in which a home was built, if it has off-street parking, the size of the garden, if the kitchen and baths have been renovated since the last sale, masonry or wood frame, all contribute to the price and value of a property,” she said. “There is no way you can comp those with a computer algorithm.”
Turner suggested sellers work with agents who have local knowledge of the market. Local agents will have insights into how these small differences can impact pricing, which can help sellers get a more accurate feel of the market and what their home might sell for right at the start of the process.
“You need an experienced local agent to guide you through the intricacies of the market,” Turner said. “All real estate is local.”