Online Home Value Estimators: Helpful or Misleading?

Tell me if this has ever happened to you, you’ve been tossing around the idea of listing your home. You’re curious how much it’s worth so you open the laptop, head over to Zillow, Homes.com or Realtor.com, and take a peek at what’s on the market. As you scroll through the website you see an invitation to get a complimentary fair market value estimate. Sure, you can enter your email address and get the free estimate but what’s to say this evaluation is accurate?

Or…

Perhaps one of these situations is what you’re facing:

• You’ve been thinking of switching mortgage insurance carriers and need to know the value of your home.
• You’re re-evaluating your homeowner’s insurance coverage.
• You’re reviewing your property taxes amount compared to your home’s value.
• You’re interested in your home’s equity and borrowing power for a future loan.
• You’ve been considering refinancing your home.

Having accurate information is essential.

Let’s separate the misleading from the helpful information found on these types of websites compared to when you work with an experienced real estate agent.

Top Resources

There’s no question that visiting a home listing website is chocked full of information and this leads you to scroll through the pages. It’s enticing to dream. It’s luring to wonder how your own home compares. Let’s get to know a few of the top websites.

Zillow was founded in 2006 and has done a gigantic amount of marketing which makes it easily recognizable online. According to Similarweb, Zillow attracts the most web traffic out of any U.S. real estate portal. In general, Zillow makes money by selling buyer leads to agents.

Realtor.com was founded in 1995 and is the second most visited real estate web portal in the U.S., as of 2021. The website is licensed to operate by the National Association of Realtors (NAR), the real estate industry's largest trade association. Realtor.com earns income by selling leads to agents and offering advertising space to agents, brokers, and others involved in the real estate industry.

Homes.com is the fourth largest real estate portal in the U.S. based off website traffic. This website was incorporated in 1999 from an earlier entity, Homes and Land Publishing that launched in 1993. Homes.com makes money by selling leads to agents plus allowing agents and brokers to purchase websites through Homes.com.

The Accuracy Behind the Home Value Estimators

These online tools are good at providing an estimate but their accuracy for fair market value is flawed. Commonly, website visitors will see this ballpark estimate and think it’s accurately portraying an actual fair market value for their home. This can be a big mistake. Instead, think of these tools as a starting point.

The facts are:

• The estimators work off averages for area regions, not specific, comparable listings in your own neighborhood.  
• Texas is a non-disclosure state—so homebuyers do not have to report how much they paid for their home. This means websites such as Zillow and others will not have accurate comps.
• There are known information gaps. Not all home listings are included in the MLS (multiple listing services) database. The MLS database is established by cooperating real estate brokers to provide data about properties for sale, allowing brokers to see one another's listings of properties for sale with the goal of connecting homebuyers to sellers.
• There are limitations. The estimators don’t have the ability to process data on customizations and other key characteristics for homes. The estimators do better for cookie-cutter homes that are relatively new but even these estimates can be off.

Why Call a Real Estate Agent

Because as you’ve learned, the information from a home value estimator is unreliable, a better approach is to reach out to an experienced and trusted real estate agent.

The facts are:

• A local real estate agent will use comps specific to your neighborhood to determine the fair market value. Your realtor® uses comparable listings which take into consideration things such as customizations and upgrades, age and condition of the property, size, and number of rooms along with many other specifics that online estimators don’t have the ability to calculate. Your agent has numerous resources available to compile an accurate and reliable comparative market analysis (CMA) report.
• Your local agent takes into consideration neighborhood patterns of recent sales.
• Your local agent often knows of upcoming listings that are not on the MLS.

Going to the table for refinancing, switching insurance coverage, or simply preparing to list your home for sale means you need to have numbers you trust. I invite you to reach out and ask for some assistance. It’s my pleasure to help clients navigate through things.

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, #3 in 2021, and #2 in 2022. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.