11 May How Accurate Is A Zestimate?
In Real Estate today we have a growing question arising, a simple eight-word sentence:
“But the Zestimate says it’s worth this much.”
The internet has completely changed the world and Real Estate is no exception. These days, showings can be booked online with a text message sent to the owner. Buyers can get an idea of what’s on the market before they even call an agent. There was a time where buyers would drive around collecting brochures from the boxes on for sale signs in front yards. These days people peruse the web and get all that information with the help of detailed filters allowing them to get a great idea of what’s available.
The problem arises when the information is inaccurate.
Our broker website, Results.net, provides accurate and Broker endorsed information on homes. All Broker websites are very accurate because the information is drawn directly from the MLS. The MLS is the most accurate provider of home data.
MLS stands for Multiple Listing Service and is only available to licensed Brokers, Agents, and Realtors.
The data from the MLS goes out to Real Estate Broker’s websites. This includes Results.net among other companies like Coldwell Banker Burnet, Edina Realty, Keller Williams, and all others. Then Brokers send the data through a feed system to private companies like Zillow, Trulia, and Homes.com. All these websites offer helpful information about the number of homes on the market and meaningful stats like how many bedrooms and baths there are. Zillow even offers an estimate for a home’s market value.
Unfortunately, people take these Zestimates very literally. There is a reason the root word is “estimate”.
Currently, Zestimates are only within 5% of the actual price 38% of the time and this varies by location. It gets worse! The medium error for Minneapolis-St. Paul is 7.2%. This information is pulled right off of Zillow’s website. That means a home can be anywhere from 1-14% above or below what it’s really worth. On a $300,000 house that’s $3,000 to $42,000 off!
Zillow has this to say about Zestimates.
“The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”
Zillow does the best it can with the information it has. It can’t account for important factors such as location, current market trends, local house inventory, school district, updates, bad paint colors, good or bad lawn maintenance, and many other details. Zestimates give consumers an estimate of what a home might be worth but the best tool is to get an agent that can walk you through the home buying process. A good agent can tell you if a home is listed at a reasonable price and the reasons accordingly.
The next time you see a Zestimate, just remember to take it with up to a 14% error attached.
We’re always happy to offer a virtual or on-site home price opinion. No one can fault Zillow too much because I know the difficulty of putting together online price opinions. As a Real Estate Agent, I’m able to take into account many key factors like the current local market, location, and recent updates.
If you have any questions or subjects you’d like to see a post on, please let us know!
