Why the Zillow “Zestimate” is Not as Accurate as You Think

Zillow says of its own  Zestimates,  “As a real estate professional one thing you are always doing is educating your clients on all things real estate. The Zestimate is no different. Armed with an understanding of how the Zestimate is calculated and the Zestimate Data Accuracy table, you can explain – and show Zillow’s own accuracy numbers and talk about why the Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.” (1)

According to Zillow’s own data for Brevard County, the majority of homes sold (almost 80%) between December 2014 and February 4th, 2015, had a Zestimate that was 20% off from the actual sales price.  If your home sold for $200,000 during that time, Zillow would have potentially given it a Zestimate as low as $160,000 or as high as $240,000. (2)

While Zillow is a popular tool to use at the moment, the Zillow computers applying algorithms to often outdated sales data is not a substitute for a professional analysis.  Banks do not use Zestimates to write loans on properties, appraisers do not cull data from Zillow to appraise a home’s value, and Realtors do not rely on Zestimates to create a true market analyses for your home’s worth.  This is because all these professionals know a local expert can do what a computer program cannot.  To list a few items that a licensed Realtor can provide:

  • Tour comparable properties to know their actual interior condition
  • Keep track of homes that were bank-owned vs. owner-occupied
  • Have local expertise on construction prices and actual costs of items such as an extra bedroom or fireplace in a comparable home
  • Truly accurate sales data via the Multiple Listing Service including concessions made during a sale, e.g. $5,000 to buyer to compensate for an unusable deck

Britton Group agents are long-time residents of our communities, and can assist you with a complimentary market analysis of your home and area neighborhoods.  Contact us to let us know how we can help you!

1. Zillow. Zillow. [Online] [Cited: February 6th, 2015.] https://zillow.zendesk.com/hc/en-us/articles/203340324-How-can-real-estate-pros-work-with-the-Zestimate-.
2. Zillow. Zillow. [Online] [Cited: February 6th, 2015.] http://www.zillow.com/howto/DataCoverageZestimateAccuracyFL.htm.

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