Plano Homes : How accurate is Zillow?

Plano Homes : throwing darts at a price board

Plano Homes : throwing darts at a price board

Anyone who has gone looking for a home or thought about selling theirs over the last two years is probably very familiar with the online website zillow, and their zestimates. For those who do not know what zillow is; Zillow, based in Seattle, operates a Web site that offers free estimates and other online tools for real-estate buyers and sellers. It draws revenue from online advertising. Zillow will offer a zestimate, or free price estimate, on the value of your home or a home you potentially want to buy. But just how accurate are these “zestimates” and how much belief should you place in the price it gives. Well the answer to that can vary from home to home but as a general rule we advise all our clients to ignore their zestimated price. In a recent Wall Street Journal study that compared the actual sales price of 1,000 homes to that of their “zestimate”, determined the zillow prices had a typical margin of error of +/-7.8%. And while I am sure zillow will tell you that a 7.8% margin of error is quite good; let me break it down to you another way.

Say you owned a house that the actual sales price of the home in today’s market would be $300,000. Take a 7.8% margin of error (which is only the average….it could be more…it could be less) and look at what it does to that $300,000 price. If the estimate was on the high side you would have a zestimated price of $323,400. If the estimate were on the low side you would have a zestimated price of $276,6000.

  1. $300,000 (actual value)
  2. $323,4000 (High zestimate using margin of error)
  3. $276,600 (Low zestimate using margin of error)
    Just using the average margin of error on a $300,000 home can give you quite the wide range of prices. List you home using a low zestimate and you might walk away leaving money on the table. List your home using a high zestimate and you might get few showings and even fewer offers and wind up never selling your home. And these scenarios only refer to homes that have been given what zillow would call a fairly accurate zestimate.
One out of 10 homes zillow does zestimates on come back with a 25% or more margin error. So for that same $300,000 home you would get zestimated values of $375,000 and $225,000. That is a difference of  $150,000 between the high and low zestimates…..or one-half of the actual sales price.
  1. $300,000 (actual value)
  2. $375,000 (High zestimate for 1 of 10 homes)
  3. $225,000 (Low zestimate of 1 of 10 homes)
     Using those kind of numbers to determine your sales price could be disastrous. A home in Fall City, Washington(the state Zillow is from…so if they were going to get one right shouldn’t this state be the one) was recently valued at $661,756 by zillow. The actual sales price on the home; $2,690,000. Hey thats only 2.3 million dollars zillow didn’t account for. Walking around money right?? Harldy. That is why we ALWAYS tell our potential clients to ignore the zestimates they see and to speak with a licensed real estate professional.
     Almost all Realtors are more than happy to sit down with you and go over a thorough comparative market analysis to help determine the value of your home that will take into account local market factors, trends, stats, and personal real estate knowledge. Using the knowledge of a local real estate professional should always give you better insight as to the value of your home and what is happening in YOUR market than any website in Washington could generate for you.
  So in conclusion, while Zillow can be a fun website to play around with while you are bored at the office, in the opinion of this professional, it is not a tool I would reccommend any of my clients use when it comes to seriously considering to buy or sale a home.
To speak with a licensed REALTOR who would be more than happy to give you a free estimate of your home’s value and what options exist in today’s market call Hunter Webb at 469-951-2299 or visit our ASK A REALTOR page here 

To see a video by The Wall Street Journal breaking down the science behind Zillow, Trulia, and other popular sites CLICK HERE

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About hunterwebb

I am a 26 year old real estate agent in The Dallas Fort Worth Metroplex. In my downtime I enjoy watching sports, reading a goodbook, and grilling up a good meal.

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