How Accurate Are Zillow's Zestimates?

They are a joke in many areas of Phoenix

I haven't seen much information that is accurate for our area.  It's a useful tool in many ways but not always correct.

Thanks for the post on Zillow.  Zillow estimates are not too accurate.  Give Zillow lots of credit for the work they are doing and they are a great data source  for home buyers and sellers beginning their research.  I have seen wildly variable number for Ann Arbor real estate.  Get information from experienced Realtors that know current market conditions.

Hi Sara. Not sure if you remember me, but I was one of those agents who came up to you at the "Triple Play" real estate convention in Atlantic City, NJ and told you about my Zestimate gripe. Remember, I have the waterfront listing with panoramic views in South Amboy, NJ listed for $1,875,000 who has a buyer who wanted to make up his own price because "Zillow told him the home should be valued at lower price?" Thanks for turning me on the margin of error link on the site. I will definitely be using it going forward with buyers especially.

Remeber that estimates are just that. Real estate is always a very localized affair and overall estimates never tell the whole story, but they are a place to start.

I think the Zillow gives buyers or the sellers some ideas of their home value. However, at times with manhattan Real Estate market there are sometimes a huge gap in price difference... It may have to do with the fact that we do not have MLS here in New York city.

Sarah, Zillow is very close in this area. 

Hi Sara - I have checked zestimates of homes sold in my market area and find Zillow to be off by quite a bit.   When I look at comparable properties I'm finding the comps include active properties, withdrawn and expired properties, and some sold properties.  In my area Zillow reports a 10% + margin of error.

Zillow is total nonsense!  By the time you get the public records of closings your already how many days past?  That's not exactly what technology and the public is expecting is it?  Old info & not too accurate.  Yikes +/- 20%?

I find Zillow to be accurate for very homogeneous properties for the area.  Basically are there a lot of similiar properties in similiar locations and similiar fit and finish.  Once you deviate from that there is no interpretation of the data and the Zillow numbers go askew.

Spencer from Zillow here.

What a great discussion. Sara, thanks for the post. And thank you all for the comments.

I want to echo what several Realtors have pointed out: Zestimates are just a starting point, not the ending point in determining a home's value. That's all they're intended to be. Anyone who stubbornly believes that a home is worth exactly what a computer-generated Zestimate says, despite possible evidence to the contrary, is just plain wrong. There are of course many many homes where Zestimates are spot on, but there are also homes where the Zestimate is not even close. I'm going through a refi right now and my appraisal came within 0.1% of the Zestimate, both of which I think are pretty much spot on. So my house in Seattle seems to be pretty darn accurate, as is my in-law's place in LA and San Diego. But my parents' place in La Jolla.... oh don't get me started. My parents' never let a week pass without telling me that their Zestimate is too low.

We've always been very transparent about our accuracy statistics, as Sara points out. The accuracy chart is actually one of the most visited pages on our website, and with good reason. And the value range next to each Zestimate is important also.

The advice I'd give to a Realtor worried about an inaccurate Zestimate is to use it as an opportunity to show off how smart you are, at the expense of the computer algorithm. "Yeah yeah, that computer thing is all fine and good, but let me show you how my local market knowledge and specific understanding about your particular house can help us arrive at an even more accurate value of your home." In fact, many agent and brokerage websites actually choose to put Zestimate functionality onto their website for just this reason. They use it as a sort of light lead gen tool -- enter your address to get a Zestimate, and now if you want to talk to an agent about this please click here. Check out Prudential California's website, for example, or Southern Winds (a Charlotte brokerage).

As several of you pointed out, an owner or an agent can also "claim a home" and then publish their own estimate of the home's value. It's a little template wizard thingy where you can choose your own comps, add in your own home improvement information, etc, and it recalculates a value. You can then publish that to the site, if you want. In addition, you can change the home facts (e.g., # Beds, # baths, sqft, etc) and these changes actually affect the Zestimate itself. Millions of users (homeowners and agents) have done this. So if you have a listing and the Zestimate is troubling you, the best thing to do is to make sure that it's listed properly on the site, with the corrected home facts (which will improve the accuracy of the Zestimate). And if you want, to use the "My Estimator" tool to publish your own estimate of the home's value, or you can have the owner do it if you think it's sketchy for an agent to opine on a home's worth.

The most important thing to remember is that there are over 80 million homes listed on Zillow, almost every home in America. Unlike every other real estate website, we already have a webpage for pretty much every single home in the US. If it's posted for sale on Zillow (either via a brokerage feed or by an individual agent), then the Zestimate comes off of the map page entirely and it's replaced by the listing price, and the Zestimate gets bumped all the way to the bottom of the home's details page -- it's the For Sale price that's listed up top. So the advice I give to agents who think one of their listings has an inaccurate Zestimate is to make sure it's listed properly on Zillow, so the Zestimate gets bumped down and the gorgeous photos (of the home and of the listing agent, of course) are on the home's page. You can learn more about listings here.

Anyway, thanks everyone for the discussion. Something tells me this isn't the last time it will come up!

Happy New Year,

spencer

A Zestimate would not be good to go by in my area.

With all the emotional outpouing against Zestimate, Zillow must be on to something. :) I don't use Zestimate for valuations. I use it for price trends.

What Zillow is doing is the future of valuations. It is just a matter of time.

Banks don't use appriasals for valuations. They use them as justification for what they want to do anyway. If they don't want to do the loan, correct appraisal or incorrect appraisal, they will find something to reject the deal altogether.

Lee

BanksFreeInvesting.com/blog

The real estate industry has thrived on hiding information from buyers. In the age of total disclosure of Facebook, Twitter, MySpace, etc., secretive MLS and even appraisals may be toast. It's just my guess.

There was a time when I used to wish that buyers, coming to see my listed properties, did not know about Zillow. At that time selling prices were higher than what Zillow would show. Zillow is a private company. In a free-market economy, they can present any information they want to present.

NAR seems to be very proud of being a seller-representing organization. Even in 2008, agent-assisted houses sold for 26% more money than a FSBO. http://www.realtor.org/research/commentary_falling_fsbo Isn't this "interesting" that real estate agents are so enamored with the word "SOLD," and not with "BOUGHT."

Real estate agents MUST understand that banks don't care about them when they show up as buyer agents. Heck, banks don't care about the buyers either. Bank of America is amusing itself with one of my buyers. :) They accepted an offer with a certain closing date. Since BofA has the price locked, they are now negotiating on the closing date even though I specifically told them that the client needs longer closing date.

Realtors will have to show respect to the all-empowered buyers, or...

Lee

Lee Ali is the author of "Crowdfunding: The Solution to Eliminate Booms and Busts in Real Estate Forever!”

Sara, found this post when reading another on Coutrywide using Zillow. Thanks for the clarification about Zillow's sources and info on the accuracy. ~Sharon

I think it has been re-iterated that Zillow House Values or Zestimate is a starting point when you have a thought of putting your home on the market.  When it is time to get serious, it is time to call your local Realtor.    I recently did a post on the Zestimate accuracy and found in my community it was on average about 6.2% off leaving an average of $22,000 per home on the table.

Information from the sites like Z. is based on a limited set of facts about a house, such as square footage an number of rooms. However, those AVMs may miss important factors, like  a desirable school district, view, noisy street exposure, privacy, etc. You have to compare the subject property to identical or similar and make all proper adjustments since rarely properties are the same( condition, location, layout, sqft, etc.)