How Accurate Is a Zillow Home Estimate?

Home buyers often want to get pricing information for a property without having to rely on a real estate agent. This is where real estate sites like Zillow.com come in handy. However, can you really rely on a Zillow home estimate?

How Zillow’s Estimates Work

Zillow acquires data from tax assessor and county records, real estate brokerages, and multiple listing services (MLSs). It also incorporates user-submitted data. For example, a homeowner may contact Zillow to update information about their property’s features. The owner may improve the Zestimate accuracy for their home by submitting up-to-date information on finished square footage, number of bedrooms and bathrooms, and lot size.

How an Agent Estimates Home Value

When an agent assesses a property, typically they begin by studying it from an overhead, satellite view on Google. They note whether it backs up to a busy street, the proximity to commercial property or freeways, the size of other homes nearby, the vegetation and landscaping, and its orientation to the sun. If available, they will view any photos of the exterior plus a street scene.

An agent might then run an automated valuation. There are two ways to do this: one uses specialized real estate software, and the other uses sales pulled directly from the MLS. The resulting values from these two methods are often very different from each other, but if used together they can provide a range of value.

Armed with that information, an agent then inspects the home and looks at it through the eyes of a buyer and an appraiser, as well as considering how the house will be positioned against the competition on the market.

How Appraisers Assess Value

Before the lender will sign off on your home loan, they will insist on a home appraisal. Typically, this costs several hundred dollars and is paid for by the buyer.

Home appraisers must be licensed and certified by the state. Their job is to conduct an unbiased assessment of the home’s value. To do this, they’ll conduct a walk-through, comparing the house’s features against a checklist. They’ll look for visible defects, but they won’t look for potential issues in the same way as a home inspector would.

Zestimate Accuracy

Zillow never claims to be 100% accurate. If all the homes within a six-block radius are very similar to each other, a Zillow estimate will be much more accurate, perhaps within 10%, because there are not enough specific variances to throw it off. In other cases, such as for older neighborhoods with many homes that have been improved in different ways, it won’t be that close at all.

Zillow’s Home Estimates as a Starting Point

The Zestimate is formulated to give website visitors a range of value. It’s not meant to replace an appraisal nor a real estate professional’s opinion. Many agents might take a gander at Zillow values before visiting a seller, because they know the seller is looking at those values. However, real estate agents do not use Zillow to price a home.

See full article:The Balance