In recent years, Zillow has become a staple of the home buying and selling world. Websites like Zillow have given potential buyers and sellers an insider’s view, so to speak, on the housing market. At one time, only real estate agents had access to home prices at their fingertips. Zillow has kicked that door open and made home information available to all. However, there is a lingering question. Are Zillow estimates legit? Let’s pull back the curtain on Zillow and answer that question and more.
How does Zillow work?
Zillow operates off a proprietary formula to determine a home’s value. We know about this formula because it is based on public records and information entered by Zillow users. Some factors Zillow uses include the number of bedrooms, the square feet of living area, the number of bathrooms, and the size of the property. In addition, from public records, Zillow knows the price the home last sold for and for what other homes in the neighborhood have previously sold. All of these factors are used by Zillow to determine a value for the home. Unfortunately, Zillow’s formula cannot consider unique characteristics that may impact the home’s value.
Assessed home value
One of the factors Zillow uses to determine a home’s value is the house’s assessed value from public tax records. Unfortunately, it is rare that a home’s assessed value directly correlates to its market value. There are several reasons for this, one being timing. Assessed values are used to determine property taxes. Because the housing market fluctuates, it usually does not correlate well with the assessed value. The market shifts more frequently than the occurrence of home assessments.
Why Zillow estimates fail
At first glance, Zillow estimates seem like they can provide a decent ballpark figure for home values. Sometimes it succeeds, but more often than not, it fails pretty significantly. Some Zillow estimates have been off by as much as 40% or more! Other factors that make information Zillow provides unreliable are the previous sale prices. Though helpful, these are highly inaccurate, especially if a home last sold 10 or more years ago. The housing market changes sometimes, it seems, minute to minute. Dated information is not your friend!
Zillow admits it
Zillow even acknowledges their estimates may not be accurate. “The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 6.9%. The Zestimate’s accuracy depends on the availability of data in a home’s area.”
If you are looking at selling or buying a home, you want to work with someone you can trust. You want to know you are dealing with accurate numbers to set proper expectations for selling or buying a home. As a local realtor, I can help! Call me at 717-253-3259 (cellphone) or visit my website at www.karentavenner.com.