This is not about Zillow or any other online valuation tool that generates an automated value for your home and whether these sites provide accurate information. The question should not be “Are Zillow estimates accurate”? Instead, the question should be “What margin of error is acceptable to you?”
In the last couple of weeks, I’ve had clients asking what I think their home can sell for “because Zillow says…’x'”. Check out the summary of the results below:
- Case 1: Based on recent sold data at the time of the call, the online estimate was pretty darn close, however, it was 29% under where the home could actually sell.
- Case 2: The online estimate was 27% over what the home could sell for.
- Case 3: The online estimate was 15% over what the home could sell for.
- Case 4: The online estimate was 7% under what the property could sell for.
There are a few reasons that these online estimates are often “off”.
- Texas is a non-disclosure State. This means that when a home sells, the sold data is not public. This is different from most, if not all, other States.
- Computer generated models don’t account for the many nuances that must be taken into consideration such as lot desirability, neighborhood section, home condition and upgrades, style, original builder, and overall buyer desirability to name a few.
- Computer generated models don’t have insight. Knowing hyper-local supply and demand issues, what owner occupant buyers are looking for vs. investor buyers, anticipated housing development, business openings/closings/relocations, and infrastructure issues or changes are all items that affect value and must be taken into consideration.
Having access to data is one thing. Understanding how to interpret that data is another. Having access to a platform that provides home and neighborhood details is one thing. Having someone provide insight into the neighborhood or builder of that home is another. Having access to pictures is one thing. To have someone decipher what actually adds or detracts from value and desirability in that particular location is another.
To Summarize, when asked “Is a ‘Zestimate’ accurate?”, the answer is sometimes. “Sometimes” isn’t good enough for me when we’re talking about money – whether we’re on the buy-side or the sell-side. Depending on your scenario, it might be good enough. Only you can determine what margin of error is acceptable to you. If your acceptable margin of error is low, get in contact with your favorite REALTOR® who is extremely knowledgeable and experienced.