How much weight does the Zillow “Zestimate” of my home carry?

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With the rise of popularity of listing site zillow.com, almost everyone is familiar with the “zestimate” – zillow’s estimate of what a property is “worth”.  Interestingly, the listing website says itself that they’re not very accurate.

zestimate

How does zillow come up with the estimates of worth?

  • Zillow’s zestimate is calculated by a computer formula using data entered into public records and user-entered data to assign a value of worth.

How accurate is a zillow zestimate?

  • In Los Angeles, zillow rates themselves 3 out of 4 stars in accuracy
  • There are 2.9 million homes on zillow in L.A, of those 2.9 million have been assigned a zestimate
  • Zillow states that of those estimates, they think that they are within 5% accuracy of the actual sales price only 39.9% of the time for homes in LA.
  • Zillow states that their zestimate is within 10% of the actual “worth” of Los Angeles homes about 65.8% of the time.
  • Zillow states their zestimate is within 20% of the actual worth 86.6% of the time in Los Angeles.
  • Their median error is calculated at 6.6% in Los Angeles.

Zillow Zestimate Accuracy Los Angeles

 

A property’s “worth” is really what a buyer is willing to pay for it and a seller is willing to sell it for.

How do these statistics relate to the worth of a property?

  • Let’s say for example a Los Angeles property has a zestimate of $1,200,000.  That being said – zillow is stating that there is 60.1% chance that their zestimate is 5% off of the actual worth of the property.  What does that mean?  $60,000 dollars in either direction.  If you’re going off the zestimate to value the home, you could either be leaving $60,000 dollars on the table of what the property could sell for, or overpaying by as much as $60,000.  That’s on the conservative side. Zillow states there is a 13.4% chance that they’re off by as much as 20% in value.  For the same $1,200,000 dollar house – that’s a $240,000 dollar swing!  That is a lot of money to either lose or overpay for a property.

Zillow says, the zestimate is “a starting point in determining a home’s value”.

So what’s the best way to know the real value of a property?

  • Have a real estate agent who’s an expert in the area visit the property and perform a comparative market analysis of the home.
  • Hire a local expert appraiser to perform an appraisal of the home

There is no computer program out there who can do the kind of analysis that a realtor or appraiser who is an expert in their field can complete to value a home.  While the zestimate can be a fun tool to help give an idea of what a home might be worth, if you want a truly accurate estimate of the worth of a home you’ll need to look at more information.  Bring in an expert to help you sort through the nuances and individual characteristics of each property for a more accurate estimate.

 

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Comments

  1. Jeff Salcido says:

    Great insight

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We do not guarantee the accuracy of square footage, lot size, or other information concerning the condition or features of the property provided by the seller or obtained from public records or other sources and the buyer is advised to independently verify the accuracy of that information through personal inspection with appropriate licensed professionals.

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