“But Zillow Says My Home is Worth [Insert Number Here]”
Taking a look at the accuracy of Zillow’s “Zestimate”
If you’ve ever taken a look at the real estate website, Zillow®, you’ve likely seen that they offer up what they call a “Zestimate®” on the current value of a property. And oftentimes during the pricing conversation we have with our sellers we hear “but Zillow estimates that my home is worth X-amount.” These estimates are great when they closely resemble reality but we have to use caution when relying on those numbers as fact. Even Zillow recognizes that their data is not always accurate, stating in their website FAQ under “Data Coverage and Zestimate® Accuracy” that:
Some counties provide all the data we could hope for, but others are lacking such key things as the number of bedrooms and bathrooms, or, in some cases, the square footage of the home. The more data we have, the more accurate the Zestimate. And, we’ve made it easier for our users to help us improve accuracy by incorporating edited home facts into our Zestimate calculations.
Zillow even offers up some data to show how accurate their Zestimates were for the previous quarter based on the property’s sales price compared to the home’s Zestimate. In King County, slightly less than 1/3 of homes that sold in Q3 of 2013, had a Zestimate that was within 5% of the Zestimate; 60.2% of homes were within 10% and 87.3% of homes were within 20% of the sales price.
So if Zillow estimates that your home is worth $500,000 in King County, there is a chance that the actual sales price could be closer to $400,000 on the low end at that 20% threshold. Even if the Zestimate is only off by 5%, that is still $25,000. On the flip side, your sales price could be greater than the Zestimate by these same amounts so it makes sense to work closely with your real estate agent to determine a sales price that accurately reflects the current market for your neighborhood.
If you are curious about the accuracy of Zillow’s data for other counties in Washington State, check out the table below pulled from an Excel workbook Zillow graciously made available on their website:
Accuracy Rating Guide:
Four Stars = Best Zestimate
Three Stars = Good Zestimate
Two Stars = Fair Zestimate
One Star = Tax assessor’s value, or unable to compute Zestimate accuracy
0 stars = No valuation
If you have questions regarding this information or are interested in discussing the value of your home, don’t hesitate to reach out. We can help put together a Comparative Market Analysis on your behalf or recommend an appraiser. Either way, we feel strongly that as a buyer or a seller, you should take Zestimates at face value and understand that there is some margin of error associated with that figure.