How Accurate is Zillow Zestimate?
As a home appraiser, I get more than the occasional homeowner that says…
“Why don’t you just use Zillow?” or
“I already know what my home is worth. I looked on Zillow.”
Even our most sophisticated clients tend to ask the question “how accurate is Zillow Zestimate?”
To answer “how accurate is Zillow Zestimate” you need to look no further than the Zillow website. The answer is LESS THAN prominently provided in a link at the bottom of the page labeled “Zestimate.” “The Zestimate® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal”, as stated on Zillow.com. The problem with this lip service is that estimating market value of a home is precisely what a home appraisal is.
Data on How Accurate is Zillow Zestimate?
According to Zillow.com
Suppose your home actually appraises for $200,000 by a certified home appraiser. Now apply the Zillow national error rate of 8.7%. Your home value may estimate up to $17,400 over value or under value. This would give you a range from $182,600 to $217,400. On a $200,000 home that is a spread of $34,800. This makes using Zestimates for anything more than playing monopoly an issue. More importantly, this is for the lucky half. The losers of that coin flip see more extreme variations in value. How accurate is Zillow Zestimate? Summed up, SCUD missiles are more reliable.
Zillow claims, “the Zestimate is a starting point in figuring out the true value of a house.” They suggest that they are a good tool for home sellers and home buyers. But with error rates that high, I suggest that this is misleading at best.
What do Zillow users Really Know About Zestimates?
Zillow claims “Most understand that the Zestimate is exactly that, an estimate of the value of a home.” On what statistic, survey or reality is this based? Here is what I do know. Zillow ranks at the top of search engine results for many search terms like “what is my home worth”. Being the authority site that they are, I suggest that most users don’t understand what the Zestimate is AND just how inaccurate it is, even in the markets where they have the best data. According to the Zillow advertising page, they have over 70 million unique users a month. How many of these 70 million users have read and understand how accurate the Zillow Zestimate is?
How Do I Find Out What My House is Worth?
The best way of determining the market value of your home is to get a home appraisal through a certified home appraiser. Home appraisers have the education, market knowledge and local data that is required to form a credible opinion of value. For what it is worth, Zillow actually recommends this. PreAppraise has started to compile data on actual home appraisals and corresponding Zillow Zestimates. We will publish our finding once we get enough data.