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Are Zillow’s 'Zestimates' Accurate?

Lisa Loper of the Scott Loper Team discusses the advantages and disadvantages of Zillow’s Zestimates.

Zillow is a great tool for consumers to gauge home prices in their area or for an area that they are considering moving to.  Zillow tracks all the pertinent real estate information regarding listings and sales in the area.  They have complex mathematical models that provide an estimated home value for every single house, known as the Zestimate.

However, while Zillow is able to access tax record information (such as age, lot size, square footage, number of bedrooms, bathrooms, size of basement, garage, etc), it has no mathematical way of assessing the condition of a home.  So a 20 year old 4BR/2.1 bath 3,000 sq ft colonial on one acre of land in Montgomeryville will have the same Zestimate even if one home has all new kitchen, baths, HVAC, roof, and siding while the other simply has the original of everything.

Zillow assumes average condition on homes—some updates, routine maintenance, general upkeep, good condition.

Additionally, Zillow does not necessarily know if one home has a finished basement or if power lines or a roadway (such as the 202 Bypass) affect a couple homes (but not all) within a particular neighborhood.

So the short answer is sometimes Zillow’s Zestimates are very accurate and other times, they can be far off the mark.  Zillow is constantly trying to improve its algorithms to improve the accuracy of its Zestimates.

A buyer or a seller should never put too much weight on the Zestimate, especially if the home is not a typical “cookie cutter” home in a large development.  A consumer should consider the recent comparable sales and like an appraiser, do additions/subtractions of value for features that differ from the subject property.

Zillow’s Zestimates are great for people relocating from a different area to give them a gauge of what home values are in an area.  And Zillow has a wealth of useful information (i.e. number of homes for sale, days on market, whether prices are trending up or down, recent sales, etc).  It is also has a great forum for consumers to ask questions.

Check out our reviews on Zillow. http://www.zillow.com/profile/Scott-Loper/Reviews/

 

The Scott Loper Team includes Scott & Lisa Loper, Keller Williams Real Estate, 601 Bethlehem Pike, Bldg. B, Ste. 100, Montgomeryville, PA 18936, (215) 631-1900, www.ScottLoperTeam.com.

brian October 18, 2012 at 06:07 PM
Appraisals are mainly based upon livable square footage. Sales prices are based upon SF and condition of home. so i agree that condition of home can have a huge impact, generally most homes in an localized area are "kept up with the jones's". so, unless you find a random outlier, zillow is fairly accurate. for instance, the average home price of Eastern Blue Bell is $170/sf. But, when you look into specific neighborhoods, such as a split level community, the pricing looks more like $155-160/sf. Obviously if the house hasnt been updated in 50 years and has a hole in the roof, the pricing reflects this. overall, Zillow is accurate.
Mike S. October 18, 2012 at 06:09 PM
Zillow is horrible. I just refinanced my home and it was valued at over $265K. The "Zestimate" they put on it is $221K. It is all updated and my neighbors is not. No pool, deck or anything unlike mine, but their "Zestimate" is $225. Go figure.
Coldwell Banker Realty Corp October 18, 2012 at 07:34 PM
A common problem for us Realtors. We wrote an article on this same topic as well: http://lansdale.patch.com/blog_posts/why-your-zestimate-is-not-totally-accurate
Thomas Jefferson October 19, 2012 at 05:52 PM
Zillow is a really great resource for house hunting. The reality is that most people over-value their homes, the Zestimate is simply a way to take a guess at a more realistic price. Anyone that makes an offer on a house based off the Zestimate is uninformed. Your realtor will give you an idea on what offer number you should start with based on what your price ceiling. I've seen sellers complain about this, but is it really a problem where people are making initial offers based on the Zestimate? Not really.

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