A calculator provided by Zillow called Zestimate is probably one of the most popular one to calculate how much a home is worth. Is Zestimate really accurate? How accurate is this calculator? Find out the answer to the question by reading every single word below.
According to the official website of Zillow, the accuracy of the Zestimate calculator depends on the location and the availability of data in a certain area. A few areas have more detailed home information available such as square footage and number of bedrooms or bathrooms while some other ones do not. Basically, the more data available, the more accurate this calculator value will be. The median error rate of this calculator for on-market homes nationwide is 1.9%. On the other words, Zestimates for half of all on-market homes are within 2% of the ultimate sale price, while half of them is not. Apparently, the median error rate for the off-market homes is 7.5%. Feel free to check your Zestimate or update your home details.
In fact, Zillow actually provides data for most real estate markers about the accuracy of Zestimates. As stated before, the median error for bigger markets is usually around 2% of the sale price of the home. However, the issue arises when they are wrong, the difference can be really significant. For instance, depending on the metro area, Zillow might be about 5% of the sale price only 62% of the time. Here is the example of the data for Buncombe Country, which included the Asheville and Black Mountain real estate markets:
Off market properties:
- Median error: 10.8%
- Homes with Zestimates: 84.9k
- Around 5% of the sale price: 27.8%
- Around 10% of the sale price: 47.0%
- Around 20% of the sale price: 72.1%
On market properties:
- Median error: 2.1%
- Homes with Zestimates: 1.8k
- Around 5% of the sale price: 82.1%
- Around 10% of the sale price: 95.5%
- Around 20% of the sale price: 99.2%
For the homes on the market in the area mentioned above, Zillow only comes with 5% of the sale price 82% of the time. That’s clearly not bad. However, the thing might be different if your home is part of the 18%. In this case, an error or more than 5% can be significant.
Keep in mind that the data of Zillow is markedly better for on market homes compared to the off market ones. The reason is probably because Zillow can use MLS data for homes on the market, which should be more accurate if you compared it to the tax record data. Still, Zillow is not that accurate in Buncombe County to make it a good tool.
Zestimate by Zillow used to estimate a house based on their Zertimates on quantitative data, including year built, square footage, number of bedrooms and many more. Since that time, this one has improved itself to its algorithm to include the other aspects in its calculator. However, there are a few things that you have to consider when you are looking at the Zestimate of your home or a home that you are consider to purchase.
Are you planning to sell your home and wanting to know how much it is worth? Do not fall in love with home value estimates you see online because many of them are far above market value. All the people who sell the real estate on inaccurately high estimates tend to overprice their homes for sale and it would be hard for them to make the price lower.
It has been known the price that is set too high will get them nothing but despair and in the end, they will sell for less. If only they were priced more accurately when they hit the market for the first time, the buyer interest would be far the highest.
When hunting for homes on internet an estimate of each home’s value is usually seen. It seems like Zillow is the most popular for doing this with their well-known Zestimates of home values but the other websites related to real estate actually do the same thing. Most of them do not give you an estimate price range, you are given a price down to the dollar and that precision causes their estimates an inaccurate air of accuracy. Actually, the sneak peak of the inaccuracy on online home value estimators can be seen by home sellers by comparing the estimates given by different websites for the same house. You are encouraged to spend you time to check out the value estimates for you home on Zillow and some other sites such as Realtor.com, Trulia, and Redfin and you will likely be surprised at the gap.
Zillow is definitely not perfect and they are not trying to hide their imperfections of its calculator from everyone and no one can expect perfectly accurate estimates from real estate sites. The main point is how the owners of homes use the prices from the tools like Zestimates as a guideline. The thing should not be used as appraisal. The market analysis that can be easily compared made by a local real estate agent and professional appraisal of the home are the perfect ways for you to learn the value of your home.
Everything has its pros and cons. Tools are not perfect when sometimes there are no recent sales of similar homes. Just like tools, appraisers, who are 100% human, are also not perfect as it is possible for them to be subjective in their assessments. In conclusion, there is no one that can give a perfect assessment of a home’s value but there are some guidelines that you can follow when purchasing, selling, applying for a loan, and knowing the value of a home is like a must. Comparing from more than one tool is better for you so you can know which one is closest to your prediction. If you want to know more about how accurate Zestimates by Zillow is, feel free to try it.