Zillow ZESTIMATES

Zillow ZESTIMATES

In today’s real estate world, home  buyers, sellers and shoppers routinely go to internet online real estate information and listing sites such as Realtor.com, Redfin, Yahoo Homes and Trulia. The most popular site is Zillow.  In addition to active listings of properties for sale, the site provides square footage, lot size, room counts, tax data and other key information on millions of homes.  It also provides, the often misunderstood “Zestimate”, Zillow’s proprietary AVM, automated (property) valuation model/estimate. AVMs use mathematical modeling to digest the subject property’s physical characteristics, publicly available data and mountains of local market property data to arrive at a value estimate.  Millions/”Zillions” of data points go into a Zestimate.

Zestimate accuracy most depends on the conformity of properties and the availiability (and accuracy) of data in an area. The more accurate  data available,  the more accurate the Zestimate. As an example, AVM estimates are generally more accurate for homes located in “newer” large Planned Development communities where variances for age, lot size, room counts, condition and architectural styles are relatively small versus homes in Arcadia which generally have much larger variances for the same property factors. AVMs utilize physical property data but cannot yet factor “emotional” market factors such a property finish, floor plan, flow and exterior appeal. Zestimates for higher priced home areas are generally less accurate. Nationally, Zestimates now have a median error rate of 4.3 percent. The error rate for some locals can be much greater! Think of Arcadia where the median sales price exceeds $1.3MM+.  A 4.3 percent error  is “big money”. One other thing to think about – the Value Range contained in the Zestimate shows the high and low estimated value of the home. A wider  range should alert one that the area volatility is greater and the value estimate reliability should be questioned even more critically.

In my opinion, the Zestimate for our home fell at the low end of our homes’s value range. Probably most owners have the same parochial thoughts. The Zestimate accurately reflected the physical characteristics of our home (e.g. sq. footage, room count, age …) but failed to reflect a permitted 600 sq. ft. plus loft guest house we built on the property.

The good news, most area sellers and buyers do not accept Zestimates “as gospel” and understand that the Zestimate is just that, an estimate of the value of the home. It is a good starting point but should not be the center point for pricing a home.  Advice – work with an experienced real estate agent who is active in the area, physically inspects the real estate and takes special features, location and market conditions into account. Lastly, make sure your agent is a good communicator and has your objectives as a number one priority.