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Why Is My Home Value Dropping on Zillow? 6 Reasons Why

No one wants to see their home value drop, especially if there’s nothing on the surface to indicate a decrease. If you rely on Zillow to estimate your home’s value, you may notice it fluctuates over time. Here’s a closer look at why this happens.
No one wants to see their home value drop, especially if there’s nothing on the surface to indicate a decrease. If you rely on Zillow to estimate your home’s value, you may notice it fluctuates over time. Here’s a closer look at why this happens.

Zillow has become one of the handiest tools in real estate, putting power directly into the consumer's hand. When you're selling a home, chances are you check Zillow first to see what your home might be worth and what other properties in your area are going for (and if you're like some homeowners, you check this estimate often).

Ideally, your home will go up in value over time, especially if you bought it during a downturn. The last thing you expect to see is a decrease in its value, but it sometimes happens.

If you're worried about a Zestimate drop, talk to top agent to get a comparative market analysis, especially if you're considering selling your home.

Don't panic yet: here are six reasons why your Zillow estimate, or Zestimate, may have decreased:

1. The Zillow Algorithm Changed

Zillow works off an algorithm, and when changes are made to the algorithm, the calculations will likely also change. Also, the algorithm refreshes every day to use the latest available data, which may impact the difference in value you see each time you check it.

2. You Listed the Home for Sale

When you list the home for sale, Zillow says that new data feeds into the algorithm that can change the Zestimate. It includes data that isn't available for off-market homes and using the listing data to adjust accordingly.

3. Zillow is Missing Some Facts

When Zillow doesn't have all the information about your home, it could negatively impact your home value estimate. The best practice here is to ensure you've accurately described your home, check off all the amenities in your Zillow profile, and leave nothing out.

4. The Estimate is Adjusted Based on List Price

When you set a listing price for your home, don't be surprised to see a change in your Zillow estimate. And if you raise or lower that listing price, the estimate may adjust again.

Previously, Zillow has said that its Zestimates are independent of list price because they want to track the market, not drive it. However, there have been cases where Zillow considers the list price as a valuable signal, particularly when other data is not available, and use it to adjust their Zestimate. This is not a manual process, but rather spurred by the algorithm.

5. Homes in Your Area Affect the Data

Zillow relies on the data from neighboring homes to calculate your home value. If homes in your area are selling for under market value, they will affect your estimated home value, plain and simple.

Simply put, the algorithm pulls your home's square footage from tax records, then pulls data from recent home sales in your area to create their calculation. It's not an accurate calculation because it doesn't take into account things like building materials, home style, improvements, higher-end appliances, and other things that can increase your home value. Rather, it's a strict apples-to-apples comparison, when really it shouldn't be.

6. The Market Shifted

If you checked your Zestimate during a hot seller's market, then checked it again when the market turned cool, then your home value may have taken a hit. In general, homes are worth less during a buyer's market than during a seller's market, and Zillow may adjust the value accordingly.

Still, keep in mind that this estimate isn't always accurate and is subjective to your unique local market conditions.

Get an Accurate Home Value Estimate with Clever!

Zillow estimates are exactly that — estimates. They're not a replacement for a full appraisal, nor should they be the only tool you use to consider a home's value.

If you want a more accurate estimate of your home's value, your best resource is a local real estate agent. Your local agent knows the market inside and out, can do a comparative market analysis to gauge your home's worth, and even recommend ways to increase the home's value if you're not satisfied with the results.

If you're looking for a top-rated local real estate agent in your market that can help you sell your home, connect with Clever! Our Partner Agents are full-service, experienced real estate agents who are experts in their local markets. They also work for a flat-rate commission, saving you thousands of dollars on your home sale.

Reach out today and let us introduce you to a local Partner Agent in your area that can not only provide an accurate estimate but also assist you with the home selling process at large!

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Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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