Many homeowners overvalue their home. Here’s why.

The internet is a wealth of do-it-yourself knowledge, but when it comes to determining your home’s value, it’s best to do your own homework while simultaneously consulting a real estate professional.

Recent polls from The Mortgage Reports show that 44% of sellers check their home value using an online valuation tool. This often leads to an overly optimistic listing price—or worse, lowballing it. But despite 2021-2022’s hot seller’s market, where it seems like anything goes, experts say you are better off using a local agent or service to help you pinpoint an accurate value.

Listen to the facts vs. how you feel

It’s natural for homeowners to have strong emotions connected to the place where they live, especially if it is a house full of years of memories. Nobody wants the blood, sweat, and tears (and money) they have invested into their home to go unnoticed or unappreciated. But being emotionally attached to the home makes it hard to remain objective and smart through the selling process. After all, the current market and similar home comparisons are the primary deciding factors in how much cash you’ll get for your home..

That Zestimate is probably wrong

Zillow is transparent about the fact that their Zestimates are just estimates. Even Zillow states that Zestimates have a median error rate of just under 2% for on-market homes, which doesn’t seem like much at first. However, 2% of a $600,000 house is a cool $12,000. That’s how much homeowners could be overpricing (or underpricing) their home if they’re relying on internet real estate sites to heavily influence the listing price.

Off-market listings can be even more erroneous, with Zillow’s average margin of error close to 7%. Most websites like Zillow use a combination of user-submitted data and public records information, which often doesn’t take into consideration when a house has recently been remodeled, or if the property tax information is up to date.

Source: zillow.com

Other popular real estate websites like Trulia and Redfin also use similar formulas and databases for list price estimates. The bottom line is the old phrase: don’t trust everything you see on the internet.

It’s cliche but do your homework

Before you are tempted to list your house, do your share of the research. This Mortgage Reports poll showed that 58% of sellers spent less than three hours researching how to sell their home.

Most professionals recommend a minimum of 10-15 hours of research before listing. To get familiar with your market, visit comparable properties for sale and routinely take note of  home sale prices in your area and over the past year. This groundwork can help determine whether your house sits on the market longer than it should and whether you get top dollar for it. Extended time on the housing market can be the kiss of death for a good home sale.

Speaking to Money.com, real estate analyst Noah Rosenblatt brought up a good point:

“Sellers assume they will have to negotiate anyway, so why not start high to come down to their price? Unfortunately, this tactic leads to longer days-on-market and steeper discounts compared to pricing at-market.”

In other words, listing too high can be counterproductive and end up netting you less cash in the end. With so many buyers shopping online and creating search criteria based on lower and upper pricing limits, you may also be missing a whole market of buyers by overpricing your listing.

Real estate inventory has been historically low over the past 12 months however the latter half of this summer has seen a sorely needed increase in homes hitting the market. Be sure to trust your instincts, do the proper homework, and work with a local, expert agent who has got your back. 

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