Everything You Need To Know About "Zestimates"
Probably everyone knows about Zillow and their "Zestimate," but in case you don't, here's what it is (according to Zillow):
"The Zestimate® home value is Zillow's estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home's value and is not an official appraisal. The Zestimate is automatically computed daily based on millions of public and user-submitted data points."
Sounds great, right? The general public gets to quickly look at a home and get a snapshot of the home's value ...except it's nearly worthless as a home value estimate, and here's why.
It's Not A Great Starting Point
Zillow's home estimate is touted above as a good place to start or a good way to get a quick estimate of a home, but this is about as accurate as Googling your symptoms when you're sick to diagnose yourself... you could have a cold, or you could be dying from a rare disease. In the end, you'll still need to talk with an expert, but now you've wasted valuable time, and you're at a disadvantage because you're starting with incorrect information.
The fact is that this online estimate is flawed, and depending on where you are, it could be off by a big number.
It's Just Not Accurate
Many people think that the Zestimate is an accurate estimate of a home's value, but the truth is that the Zestimate is not very accurate at all. As defined above, the Zestimate comes from public records and "user-submitted data points", both of which can be surprisingly inaccurate.
This online estimation tool simply doesn't give you a home's true value, but you don't have to take my word for it, Zillow publishes the accuracy of its Zestimate by state and metro. They rate the Zestimate by accuracy and show how many homes come within 5%, 10%, and 20% of Sale Prices. Places get scored by metro area and state. As of this writing, Zillow no longer provides its accuracy rates for the Central Ohio area, nor does it appear to show Zestimates for homes in our area.
It Can Fluctuate
Anyone who has closely watched the Zestimate for a specific home has probably noticed fluctuations in that home's estimated value, and some homes can have wild fluctuations from one day to the next.
How can you trust a home value that may change drastically from day to day?
It Can Hurt Home Owners
Homeowners are especially frustrated with incorrect Zestimates. On the Consumer Affairs website, Zillow has an Overall Satisfaction Rating of about 1.25 stars, and a number of the poor reviews are due to inaccurate Zestimates.
I recently spoke with someone whose 3 bedroom, 2 bath home was listed with the county appraiser as being a 2 bedroom, 1 bath home. This public information caused the home's Zestimate to be very low. Even after the homeowner corrected the information on Zillow, the Zestimate did not increase until the home sold for the correct market value. Then, the home's value shot way up (don't worry, it tumbled down again a few months later).
Bottom Line on the Zestimate's Accuracy
Even Zillow knows the Zestimate can be problematic as evidenced by the fact that they stopped displaying it for many homes.
For Central Ohio Home Buyers
When buying a home, it is important to get accurate home values of homes similar to the one you are considering. Knowing how much similar homes in the same neighborhood are selling for will help you make a competitive and realistic offer. If you're using incorrect home value estimates to influence the offers you make on homes, you risk paying too much or losing the home to a stronger offer.
In today's competitive market, it's crucial to come to the table with a strong offer on a home you want to buy.
Even Zillow's former CEO Spencer Rascoff turned to an experienced real estate professional when it came time to buy a home, according to the Real Deal. They paid a couple million more than the home's Zestimate.
"When we were trying to figure out the price for the house that we bought, we relied on the expertise of the real-estate agent to help us decide what to pay. The Zestimate, at that point, was less important,” Rascoff said.
Combine the inaccurate Zestimate with the fact that Zillow often shows buyers homes that aren't actually for sale, and it's easy to see why many home buyers become frustrated with Zillow.
For Central Ohio Home Sellers
The best way to estimate the value of a home you are thinking about selling is to have an experienced professional do a Home Valuation aka: CMA (Comparative Market Analysis).
When you send us a request for a Home Valuation on a Central Ohio home, we don't look at inaccurate public records. Using our local knowledge as Central Ohio natives and our years of experience as local Realtors, we carefully analyze actual sales of similar homes in the neighborhood to provide you with an accurate Home Valuation. We also take into consideration things that online estimations simply cannot, such as the quality of the home or the interior condition.
Want to get an accurate estimate of your home's current value? Tell us a little bit about your home, and we'll put together a free report for you with your home's market value. Please keep in mind that for the most accurate Home Valuation, the home must be viewed in person.