Are Zillow Zestimates any good?
I’ll put it this way: somebody once asked a wedding guest if so and so’s coverage of a celebrity wedding was accurate. The answer? “Well, the dress was white.”
And the Atlantic Ocean is blue (most of the time), and the sky is wide…the point I’m trying to make is that Zillow estimates on home prices are accurate in only the most broad sense.
We ran through a short sample of Zillow estimates this morning on homes we know the price history on. We know the appraised value, what market activity was like when they were on the market, and what these homes eventually sold for. In every case but one the Zillow estimate was too high.
In general the Zillow estimate ran between 20% and 27% too high, with a few coming in around a more sedate 10%. In one case the Zillow estimate was 7% above the appraised value of the home, but 25% above where the offers were coming in at.
This may have helped us sell these homes (if the buyers were going to Zillow before they made offers), because they may have thought they were getting a deal…
In the one case where the Zillow estimate was low, it was 3% under the appraised and sold price. Not only that, but according to Zillow this particular home gained and lost $30,000 in value twice in the same 12 month period…and homes just don’t do that.
What Zillow doesn’t, and can’t, take into account are things like condition, location, the neighbors, general neighborhood conditions, etc. For example, homes just a few blocks away from each other might sell for a 10% difference in value just because of the neighbors (yeah, your neighbors really can have that much of an impact). Or a renovated home sitting next to an unrenovated home could sell for a lot more, just based on the fact that things are newer and the buyer knows he won’t have to work on the house again for another 10 years.
Dan Tabit, a broker from Washington, summed it up this way: “In reality [the Zillow estimate] means little. It reflects that one or more homes which are roughly similar to yours recently sold and affects the data Zillow uses to create their Zestimates. Zillow recognizes that their valuations are a starting point, but not an accurate reflection of the actual value of a home…it may also be that the previous Zestimate was based on a fully updated home with additional features your home doesn’t have.
“If you are considering buying the home in question, don’t rely on Zestimates, but get an experienced agent to provide a comparable market analysis.”
So should you stay away from Zillow? No, it’s a fun site and it can alert you to broad trends. But its accuracy is only broad, and very general.