Folks often ask me why the real estate agent’s assessment of their home value, or CMA (Comparative Market Analysis) differs from the Zillow’s Zestimate they found online. Let’s talk about the difference between the two terms.

What is a CMA?

A CMA is an in-depth analysis of a home’s worth in today’s market. This information is not readily available to consumers. You can look at the County Appraisal District report (CAD), but that does not give you the true sales price, because Texas is a nondisclosure state. That means the sales price of a home cannot be disclosed unless the client agrees to it. (See my article, “Is Texas Nondisclosure a Good Thing?”) Real estate agents, however, have access to the Multiple Listing Service, where the actual sales prices are recorded.

The seasoned REALTOR® (See my article about why the terms “REALTOR®” and “agent” are not equivalent) begins with an evaluation of similar, recently sold homes and homes currently under contract. These are called comparables, or “comps”.

What qualifies a home to be a comp?

Ideally,
• The comp should be located in the same neighborhood as the subject home.
• It should have similar heated square footage and rooms.
• It should have a similar style lot.
• It should be about the same age.

What is a Zestimate?

Directly from Zillow’s site, we see: “The Zestimate® home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions. We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:
• Getting a comparative market analysis (CMA) from a real estate agent
• Getting an appraisal from a professional appraiser
• Visiting the house (whenever possible)”

Note the words I have highlighted.

“Proprietary formula” is an algorithm, or a mathematical equation based on data. Because of Texas’ nondisclosure status, the formula does not have access to comparable sales prices, and therefore is missing a huge chunk of data. Only the real estate agent has access to this. Source: https://www.zillow.com/zestimate/

So, even Zillow tells you to get an agent for an accurate assessment of the home’s value!

© 2017 Erin Maxey Wilhite, REALTOR®