Zestimate can now be treated as a cash offer

Ever go on Zillow to see how much your home is worth? Now the real estate website is offering its trademark Zestimate as an initial cash offer for qualifying homes in select markets, including Orlando.

“We are confident enough around our Zestimate that we can say this is the initial offer,” Zillow COO Jeremy Wacksman said.

Zillow launched its iBuyer service, Zillow Offers, in 2018, expanding to include Orlando the following year. The service let home sellers who qualify skip the process of putting their house on the market by purchasing it directly. In February, the company purchased their 10,000th home nationwide.

The latest innovation removes some steps to offer sellers a cash offer immediately based on the website’s estimate.

“This has been our dream since we started Zillow,” Wacksman said.

However, real estate agent Ingrid Dodd suggests sellers use caution before accepting what Zillow puts on the table.

“It’s based on algorithms,” the Sanfordbased agent said. “It’s not based on anybody on the ground that’s looking at anything.”

While Zillow does have people in their markets who will work with the homeowner, the lion’s share of their estimate comes from national and local market data. Qualifying homes for the Zestimate offer are typically centered around the median home price for a particular market.

“This is only available on those homes where we have that confidence,” Wacksman said, adding that prices too far above or below the median were usually not reliable enough to qualify.

Other factors include how often homes in a particular area are sold and how similar one home is to another that sold recently. Wacksman estimates that nearly a million homes nationwide make the cut, but could not say how many homes qualified in Orlando.

In Orlando, the median price is $277,218, according to Zillow. Yet the Orlando Regional Realtor Association shows the average price as $325,000, meaning many area homes are above the median.

Dodd says pricing is more of an art that what data shows. “f you have a good Realtor who knows a particular market … they are much more aware of what buyers want and the subtleties of pricing a home,” she said.

A 2019 investigation from MarketWatch said people who sold to iBuyers received on average 11% less than homes sold through real estate agents.

Zillow’s published error rate — the difference between the Zestimate and what a home actually sells for — for active listings in Orlando is 2%. However, their published error rate for homes that haven’t gone on the market is 5.8%. For the median home price in Orlando, that would be a difference of $16,078.

Zillow purchases also still include fees for the seller. A quick look at price ranges for fees for a home in Orlando show they could be as much as $8,000, though that is in line with fees for real estate agents.

Wacksman said the biggest reason people are turning to iBuyers is the security.

“People really hate selling their homes,” he said. “Timing the purchase of a new home with selling your old home is a serious hassle. Having one of those taken care of invaluable.”

Dodd isn’t against the idea of this service entirely. “If you’re somebody in a hurry and you don’t want to do any fix-up, it might work for you,” she said.

She recommends home sellers take a combined approach. “I would get their estimation and then I would have an agent look at it — or maybe two — and have them look at it,” she said.