Home buyers and sellers beware. Zillow ranks itself as “Less Than Fair” when it comes to home market valuations (what they call a zestimate) in Texas. Yes! Less than fair.
Today there is more information on the internet than ever to assist a homeowner in the buying and selling of property. Great, but in this information age that we live in we have all learned, “You can’t trust everything you read (or see) on the internet.”
Now there is no way to address all the recesses of such a broad conversation in my writing. So let’s focus on just one of several giants vying for superiority in the field of real estate. Zillow. Why? Recent statistics show that near 87% of people who buy a home use an online resource before they make a purchase. Near 50% use Zillow.
The site is well laid out, user friendly and easy on the eyes. OK, I get it, but what about accuracy, specifically in Texas? Well there are a lot of things we do differently in Texas and the recording of home sales is but one of them. You see, in many states the sold price of a home is recorded as public information. Zillow has access to that data and then drops it into their algorithm to create an estimate (zestimate) of a home’s price.
Such is not the case in Texas; we are a disclosure state. The sold price of a home is considered private information and is not part of the public record. So what does Zillow use to calculate a home’s value in Texas? They use the only public information available, Tax Assessment Value. Now think about that.
• How many of us contest our property taxes on an annual basis?
• Do people want to pay the most or least amount of tax possible?
• Tax assessments are based off other similar properties in the area.
• Tax assessments most often do not account for upgrades, remodeling, dilapidation or otherwise.
• Did you call the tax assessor to let them know that you remodeled your kitchen, added hardwoods and replaced the roof last month?
• When was the last time you had a tax assessor inside your home? Have you ever?
• Do you trust your local government well enough to have them determine the price your home?
Tax assessments are a simply a poor indicator of a home’s true value. So poor in fact that Zillow ranks itself as less than fair in almost all counties in Texas. Yep, less than fair. See Zillow's assessment of their own work in Texas counties here.
When a home is sold through a Realtor® in Texas the sold price is recorded in the MLS (Multiple Listing Service). Sold prices (not tax assessed value) are crucial to determine the value of a home about to be listed and Realtors® have access to that information through their MLS. This can make is tough for those considering to go the FSBO (For Sale By Owner) route in Texas as well.
Bottom Line: Would you prefer to see a CMA (comparative market analysis) of your home’s value based on properties of similar size, with the same amenities and upgrades, in like-kind condition or one based off of a far reaching tax assessment done by drive-by from the curb?
It isn’t just Zillow in the state of Texas. If there is a third party site offering a home valuation in Texas they are using Tax Assessed Value. I would suggest using these machine estimates as a starting point, but I would never suggest using them to formally price one of my client’s homes. Realtors® have an ethical requirement to enter accurate and up to date information into their MLS systems for the very reasons discussed here.
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