Zillow. I love them. I hate them. Even so, I am happy to pay them a lot of money each month to advertise my listings. Nobody in Rochester has a larger share of advertising in your Zillow zip code than I do, but here’s the thing….
That darn Zillow “Zestimate” makes me crazy, and I wish they didn’t provide it. Let me show you why:
I sold the house above in November of 2014. At the time of the sale, the Zestimate was $513,000.
Because I know my market, I actually sold this home for $548,000. That’s a $34,000 margin, or roughly 6.5%. SIX AND A HALF PERCENT. 17 months later, the current Zestimate on this same property was still only $544,367. Lower than what I sold it for a year and a half prior.
But sometimes it goes the other way, and the Zestimate is considerably higher than the market will bear, leading to some serious discussion with my clients about the market and examination of legitimate comparables. It can be disappointing.
Let’s understand exactly what the Zestimate is and what it is not. In Zillow’s own words:
“[The Zestimate] is a computer-generated estimate of the worth of a house today, given the available data. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.” (Emphasis mine.)
According to Zillow’s most current published statistics of Oakland County:
- Nearly 65% of Zestimates in Oakland County are more than 5% different than the actual sale price of the home.
- 18% of Oakland County Zestimates are more than 20% different than the sale price.
- Zestimates in Oakland County have a 7.5% median error, and that’s in either direction!
The Bottom Line: Zillow is not a site operated by real estate agents. Zillow is an advertising company. It is a fabulous avenue for:
- Advertising my listings to buyers outside of my Multiple Listing Service
- Connecting with buyers and sellers who are looking for an agent
- Searching for a home – their platform is almost as good as mine
- Reliable reviews for real estate agents
As for the market value of your home – not so much.
A software algorithm will never physically evaluate, forecast the market, nor accurately price your home based on upgrades and improvements in which you have invested.
The Zestimate is a “guesstimate”…a tool, a simple starting point. Your decision to sell or purchase a home is too important to be based on a software algorithm.