Zillow and the Zestimate: Does yours seem low??
What is happening in the housing market in the southeast valley-- What's going on with Zestimates??
Hi, this is Merrill Jencks with the big helper real estate group at exp Realty. And I have an urgent message, kind of a, something that I think is really, really important that I want to share with the public. I just want to make sure that people really understand what's going on. I'm all about educating the clients and the consumers.
I want to make sure that you guys have the correct information in your hands, not manipulated data to favor one particular party. And what I'm talking about is Zillow and. Estimates. So I don't know if you're familiar. Most people are, you can go on Zillow and get what I call it. The Zestimate. Some people call it the Z estimate, but basically, Zillow has an algorithm that, in the past has been really, really cool.
It basically takes other similar properties in the area and automatically calculates an estimated value for your home. About a year ago, Zillow started buying homes much like Opendoor and OfferPad do, I don't know if you've heard of them, but we call them. I buyers, it stands for institutional buyers and what all these companies will do.
Zillow, Zillow, Opendoor OfferPad, and other companies like them will buy your house from you with cash. You get to choose the closing date. They'll still do an inspection. And they'll typically ask for the repairs or a credit for repairs, much like a traditional transaction, but some people like it because it's kind of a guaranteed close.
And if you're trying to sell your old house in order to buy a new house, It offers an awful lot of, uh, security with, with regards to, you know, knowing that you have for sure sales set up with one of these big institutional buyers. But I feel like they try to trick you into believing that what they're giving you is fair market value and it's not what they do is they say, Hey, here's the fair market price for your house. And they give you the sticker price. And then they're charging you usually an average of about seven and a half. To 10% in fees now, most sellers think, well, if I had a realtor, I'd pay them 6%. So this is only costing me a little bit more.
So you know what, for convenience, I'm willing to pay for that. But here's the problem. Their initial price is significantly lower than what you could actually get for the home on the open market. The home that I own in Florence as an investment property, we actually just bought it in May of 2020 for $217,000.
Okay. The Zestimate on it right now is $253,000. It's a four-bedroom, two-bath, 2,110 square feet. Here are the comparable sales, a four-bedroom, two-bath, 2067 square foot homeless, active on the market for two 95. This is our team's listing. I happen to know that we have, I can't disclose yet because it's not closed yet, but we have offers significantly.
It will sell well above $300,000. I can tell you that. Okay. This home. Is four bedrooms, 2067 square feet. And again, coming back to mine is 2,110. So I've got about an extra whatever 50 square feet. Okay. Then there's another one here. Now this one, in my opinion, is way over ridiculously overpriced. Uh, they're asking $375k.
Very similar 2,111 square feet. It's probably a model, the exact same floor plan, but it's got a third car garage. Okay. Then we've got this home here. I've spoken to the listing agent about this house. And I happen to know that they are under contract for full price and the buyer wave to the appraisal contingency.
So pretty good bet that this one is going to be closing for $305,000. Again, this one is about 200 square feet smaller. Okay. Then we've got pending listings at $275k, $285k, and one closed listing at $268k. Zestimate is significantly below that. And that's just kind of proof for you of what Zillow is doing.
Intentionally deflating. These estimates, don't be fooled by thinking that these buyers are giving you fair market value. They exist for one reason, and that is to make a profit and they are absolutely taking advantage of what, in my opinion, is. Under informed consumers. And I want to just if you still want to sell to them, then that's absolutely fine, but I just want you to know the numbers.
So if you are thinking about selling your home to one of these buyers and you just want to know, Hey, what do you, what do you think? What do I think I could get for your home on the open market? Please reach out to me and let me run the numbers. So you can at least see how much money you're leaving on the table.
And let's say that, let's say that amount is $30,000. Maybe you're okay with that $30,000. And that's absolutely fine by me, but I want you to know what that number is. So please reach out to me. Let me know if you're thinking about doing that. I'm all too happy to run those numbers for you. And let me know if you have any questions.