Today I’m answering the question, “How accurate is the the Zillow estimate for my home?” Zillow’s home value estimator computes an estimated market value for your home based on a proprietary formula using public and private data – they call it a Zestimate (that’s a fun word to say!). In Febuary, the Zillow’s CEO sold his home – how close do you think his Zestimate was? Think on it a minute and I’ll give you the answer in a below.
Anyways, sometimes you visit Zillow to find out your home’s value just because it’s fun to imagine how much you could sell your house for and how much extra money you could put in your pocket even though you have no intention of selling. Other times you could be seriously thinking about selling your home and need the right information.
Can you trust that number? How accurate is it? The simple answer is that your Zestimate is probably wrong by a significant amount and putting too much faith in the sales price it gives you is dangerous. Zillow’s own fine print and reports support this. More than 60% of Zestimates are off by more than 5% and 40% are off by more than 10%! Your home’s actual value could be much higher or much lower than the number you get on Zillow. For my home, Zillow gave a number with a margin of error of $50,000 higher or lower! That’s not helpful at all!
In fact, Spencer Rascoff, the CEO of Zillow sold his home in Febuary for $700,000 less than his Zestimate – a 40% difference! ($1,750,000 to $1,005,000, 40% – do math on side). Zestimates can be so far off because they don’t have specific information. Zillow hasn’t visited your neighborhood or seen the kitchen or bathroom update you just put in so they might price your house too low. They also don’t know about that new prison that was just built behind your friend’s house that is dragging that neighborhood’s value down .
So how can you use a Zestimate? It is a tool that can help increase your real estate awareness and give you as a homeowner public access to some information. However, it can kind of be like guessing the number of gumballs in a jar – you know the jar is big and the candy is small but how many exactly are in there is anybody’s guess. If you really need to know the value of your home, don’t take your Zestimate at face value and contact your local real estate expert. He or she can give you a pretty good idea or your home’s value in a short amount of time.
Anyways, I hope this REAL ANSWER has been helpful for you. Sign up in the column to to the right to receive more REAL ANSWERS because they’re way better than guesses. You can also ask your own questions and see the REAL ANSWERS to other questions. This is Real Estate and that’s the REAL ANSWER!