Alaskan Zestimates

Another feature that could be useful to someone thinking about selling their home are Zestimates. These are estimates by zillow on the current market value of each home. Zillow uses formulas based on publicly available data to compare each home on the market to similar homes that have recently sold.

There are at least two problems in Alaska with the accuracy of Zestimates and they both have to do with the difficulty of finding publicly available data for recent sold comparable properties.

The first problem is that Alaska is one of the few non-disclosure states. This means that residents in Alaska are not required to report the sales price of a house that they purchased or sold. This information is private and only released voluntarily.

The other problem is that many Alaskan homes do not have real comparables. They may be on 5 acres with no similar recently sold home within 10 miles of them. This makes it extremely difficult for an automated system to accurately estimate the value.

For example, I did some research today to get a good idea of exactly how accurate zestimates are. I compared the actual sales prices of 10 typical homes in the Palmer area to the zestimate. The zestimate of all the ten properties added together was only off by 5%. But the important point is that none of the zestimates was individually as close as 5% and the extremes in those ten homes were 31% high and 20% low. That is quite a range of value. That means a $250,000 house could have a zestimate of $327,000 or $200,000! Bottom line – don’t rely on a zestimate as a buyer or seller.

An experienced local real estate professional understands that estimating the value of a home with no close comparables is more of an art than a science. The true, actual value of a home is always defined by an arms length agreement between a willing buyer and a willing seller. A real estate professional is constantly evaluating what a buyer would pay for the different features of a property. They take into consideration the condition, the location, the immediate neighbors, the general neighborhood, and many other variables that an automated system cannot compute and cannot be reduced to a balance sheet. They know that buyers will be making these real-world calculations in their minds, and the also know that different buyers will be making these adjustments with completely different sets of values.

That is why there is no exact way to determine a value of a property, but an experienced professional will get you closer than a zestimate any day of the week.