I get hit with this question all the time. Let me start by saying that I believe Zillow is far more accurate in other parts of the country than it is here on the peninsula. Zillow uses a mathematical formula based on square footage, price per square foot, beds/baths/, locations within a city, and selling trends within the neighborhood to come up with a ballpark valuation for homes. By Zillow’s own admission, their valuations are only “starting points” when determining the true valuation of your home.
I will usually do a random sampling of homes, once a month, comparing their Sales Price, with Zillow’s Pre-Sale Valuation. On average, the Zillow valuation was between 10-12% lower than the Sales Price. There are several problems with using Zillow to reach an accurate valuation of your home in San Carlos:
(1) Market Swings. Our market has far too many minor swings within two and three month periods. These minor swings in prices are almost always attributed to the subtle fluctuation in inventory. The market tends to go from strong to extremely strong back to strong over an average ten week period.
(2) County Records. Zillow formulates its valuation based on county records, including the county reporting of square feet, bedrooms and bathrooms. As we all know, what the county has, and what your house actually has can be two different things entirely. Most of the time, homes having a discrepancy with the county records will have more square footage, bedrooms and bathrooms than what is actually on file with the county. This accounts for some of the problems with Zillow’s valuations being too low in San Carlos.
(3) Landscaping/Other Unique Features. Zillow cannot account for a $40,000 landscaping project, or the fact that your home is on a quiet, tree-lined street. These unique features can drastically affect the price of a home.
Bottom-line: Treat your Zillow valuation as a very rough starting point. Consult a realtor for a free Current Market Analysis (CMA) for a much more accurate valuation of your home.