How Accurate is that Zestimate?

Almost every homeowner has plugged their address into Zillow to find out about how much their home is worth, right? Online price estimates, however, may not be the most accurate measure of your home value. Realtor.com, Zillow, Trulia, Redfin and others let you find houses for sale, and most of these sites also offer online valuation estimators.

A “Zestimate” Is an Estimate…

On its site, Zillow acknowledges that a “Zestimate” is meant to serve as a starting point when determining a home’s value, and is not an official appraisal. Zillow claims a median error rate of 4.5 percent and accuracy varies by region. Many things are not considered in their estimate like condition and improvements you’ve made. Zillow also has a hard time realizing niche neighborhoods, little pockets that might have a higher value than the adjacent area. I can clearly see this on my first house in Minneapolis as the ‘Zestimate’ is about $60k below a recent appraisa! That’s a big difference.

Online home value sites obtain data from a number of resources. Most sites negotiate data sharing agreements with services. Those agreements tend to limit what they can do with the data. Many sites pull data from public records. Some sites request that home sellers provide property record updates. The source data can be a complex mixture of sources and sometimes the data can be out of date.

So, what’s a home seller to do? Well, use the Zestimate as a starting point and then compare with other home valuations. My free tool is listed below. Then, ask a realtor to do a tour of your home and a comprehensive home valuation. This is still the best way to understand the value of your home in the current marketplace!