Probably everyone knows about Zillow and their “Zestimate,” but in case you don’t, here’s what it is (according to Zillow):
“The Zestimate® home value is Zillow’s estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home’s value and is not an official appraisal. The Zestimate is automatically computed daily based on millions of public and user-submitted data points.”
Sounds great, right? The general public gets to quickly look at a home and get a snapshot of the home’s value …except it’s basically worthless as a home value estimate, and here’s why.
It’s Not A Great Starting Out Point
Zillow’s home estimate is touted above as a good place to start out, or a good way to get a quick estimate of a home, but this is about as accurate as Googling your symptoms when you’re sick to diagnose yourself… you could have a cold, or you could be dying from a rare disease. In the end, you’ll still need to talk with an expert, but now you’ve wasted valuable time, and you’re at a disadvantage because you’re starting with incorrect information.
The fact is that this online estimate is flawed, and depending on where you are, it could be off by a big number.
It’s Just Not Accurate
Many people think that the Zestimate is an accurate estimate of a home’s value, but the truth is that the Zestimate is not very accurate at all. As defined above, the Zestimate comes from public records and “user-submitted data points”, both of which can be surprisingly inaccurate.
This online estimation tool simply doesn’t give you a home’s true value, but you don’t have to take my word for it, Zillow publishes the accuracy of its Zestimate by county. They rate the Zestimate by accuracy and show how many homes come within 5%, 10%, and 20% of Sale Prices. Places get scored by metro area, state, and county. Ohio gets 2 stars (out of 4) for Zestimate accuracy.
At the time of this writing, Franklin County Ohio gets three stars for Zestimate Accuracy. In Franklin County only about half of the homes with Zestimates are within 5% of the sale price, about 70% are within 10% of the sale price, and about 80% are within 20% of the sale price. For Franklin County, Ohio there is a Median Error of 4.9%.
Delaware County, Ohio does better with a the full 4 stars for Zestimate Accuracy (at the time of this writing). Even so, it was within 5% of the sale price only 58.6% of the time, within 10% of the sale price 81% of the time, and within 20% of the sale price 94.5% of the time. The Median Error for Delaware County is 3.8%.
Note that even these county ratings fluctuate. I have been watching Franklin and Delaware counties, and they change frequently, sometimes they only have a one star rating… that’s just another reason to doubt the accuracy of the Zestimate in Central Ohio.
It Can Fluctuate Wildly
Anyone who has closely watched the Zestimate for a specific home has probably noticed fluctuations in that home’s estimated value, and some homes can have wild fluctuations from one day to the next.
How can you trust a home value that may change drastically from day to day?
It Hurts Home Owners
Home owners are especially frustrated with incorrect Zestimates. On the Consumer Affairs website, Zillow has an Overall Satisfaction Rating of about 1.25 stars, and a number of the poor reviews are due to inaccurate Zestimates.
I recently spoke with someone whose 3 bedroom, 2 bath home was listed with the county appraiser as being a 2 bedroom, 1 bath home. This public information caused the home’s Zestimate to be very low. Even after the home owner corrected the information on Zillow, the Zestimate did not increase until the home sold for the correct market value. Then, the home’s value shot way up (don’t worry, it tumbled down again a few months later).
Even Zillow knows their product needs work as evidenced by the contest they launched earlier this year to improve their algorithm. If you’re thinking about buying or selling, your best resource is a local real estate expert.
For Central Ohio Home Buyers
When buying a home, it is important to get accurate home values of homes similar to the one you are considering. Knowing how much similar homes in the same neighborhood are selling for will help you when making an offer to purchase. If you’re using incorrect home value estimates when making an offer on a home, you risk paying too much or loosing the home to a stronger offer.
In today’s competitive market, it’s crucial to come to the table with a strong offer on a home you want to buy.
Even Zillow’s CEO Spencer Rascoff turned to an experienced real estate professional when it came time to buy a home, according to the Real Deal. They paid a couple million more than the home’s Zestimate.
“When we were trying to figure out the price for the house that we bought, we relied on the expertise of the real-estate agent to help us decide what to pay. The Zestimate, at that point, was less important,” Rascoff said.
Combine the inaccurate Zestimate with the fact that Zillow often shows buyers homes that aren’t actually for sale, and it’s easy to see why many home buyers become frustrated with Zillow.
For Central Ohio Home Sellers
The best way to estimate the value of a home you are thinking about selling is to have a professional do a CMA (Comparative Market Analysis). When you send me a request for a CMA on a Central Ohio home, I don’t look at inaccurate public records. Using my local knowledge as a Central Ohio native and my years of experience as a Realtor, I carefully analyze actual sales of similar homes in the neighborhood to provide you with an accurate CMA. I also take into consideration things that online estimations simply cannot, such as the quality of the home or the interior condition.
Want to get an accurate estimate of your home’s current value? Tell me a little bit about your home, and I’ll put together a free Comparative Market Analysis for you.