How Accurate is a Zestimate

My thoughts on Zillow

How Accurate Is A Zestimate

To be upfront, I like Zillow, and I don’t have any issue that they are now a brokerage, not just a real estate website. I have clients post reviews to Zillow. I tell my clients to feel free to use Zillow and Realtor.com to search for homes outside of the searches I set up for them through MLS. 

I go to Zillow and look at homes often as I like their website and the data they provide. 

I do get a little concerned when I hear from clients, friends, and acquaintances that Zillow said my home is worth a certain amount, so it must be true, right? 

I provide this information not to hate on instant home values or Zestimate’s but to educate home buyers and sellers on how more accurate values can be provided when making big decisions with your money.  

Zestimate Home Values Explained

Are you wondering how accurate a Zestimate for a home in northeast Ohio is?

Homebuyers and sellers often ask their real estate agent, “how accurate are Zillow home value estimates.” Zillow’s Zestimate is not accurate most of the time. 

Zillow is the most trafficked real estate website that offers estimated home values. Unfortunately, while these Zestimates can certainly prove beneficial, there are times when using them can give you unreliable information. A Zillow Zestimate has proved to be unpredictable repeatedly. Many buyers and sellers feel if Zillow says it’s worth $X, then it must be. But is it? The truth is, the Zestimate accuracy is all over the map, and the same goes for other online instant values.

If you are buying or selling a home in northeast Ohio, you’ll want accurate home value information to make an informed decision. Zillow’s Zestimate can be a starting point but it should not be used to make a home value decision. 

The Problem With Zillow Home Value Zestimates

Websites like Zillow have empowered buyers and sellers to do more research. Ohio home buyers and sellers can learn tons of helpful information about area houses, including their own. 

Zillow and other instant value sites do their best to give you an accurate price of what a home is worth. Just realize these automated systems cannot think like a home appraiser because they only do what they are programmed to perform.

Instant online values cannot account for variations in the actual homes around your house they pull data from. The algorithm can substantially alter the price from any sort of “average” when a unique home closes near your house in Northeast Ohio.

Homebuyers should seek accurate pricing valuations to avoid being way under or overpaying when offering on a home. 

Home sellers can lose valuable market time by overpricing because they trusted the Zestimate as a gold standard. Luckily if you underprice your listed home in today’s market, you will still have a great chance of hungry buyers driving the price up to or above market value. 

Something I noticed in 2021 with a Zestimate is that when I list a Northeast Ohio home higher than the Zestimate value, the Zillow online value has quickly increased closer to my list price. Interesting, right!

How Zillow Estimates Value

Zillow uses an algorithm to determine a home value based on Zillow’s collected information from its users and public records.

Zillow knows what the home sold for the last time it was purchased by the current owner, and it knows this same information for neighboring homes. They track the number of bedrooms, baths, the square feet of living area, and other property data points to figure out house values.

Using this and data entered in by homeowners and MLS data, Zillow comes up with a Zestimate for what a northeast Ohio home is worth.

Unfortunately, Zillow’s algorithm cannot consider all the unique characteristics of individual properties that impact their true value.

County Tax Values are a piece of The Zestimate.

One value factor at the top of Zillow’s formula is using a property’s assessed value from Ohio county tax records. Assessed home values don’t always represent market value. Assessed values can mess up the Zestimate from the start.

I have seen northeast Ohio homes sell for tens of thousands more than the assessed value recently. Check out this Inman article from 3/6/20 Former Zillow CEO Lists Home For Nearly $8M Above Zestimate

I also saw them sell for much less than the assessed value when we were in a buyer’s market. Check out this Inman article from 5/18/16Zillow CEO Sold Home For Much Less Than Zestimate

Savvy northeast Ohio real estate agents rarely look at the tax values when trying to determine a competitive market value. What agents look at is the county’s data on a home, and sometimes that data is not correct. Incorrect county data on your home will also skew the Zestimate on your home. 

If only instant online estimates were accurate, our pricing research as agents would be effortless. To provide an accurate value, a visit to the home and a lot of data digging are required.

Past Sales are a piece of the Zestimate.

The last sale price of a home is helpful information and is the most accessible data Zillow can obtain. A home transfer price is information that northeast Ohio buyers and sellers should know about properties. However, it does not indicate what a home is worth now. A sale price that is years if not decades old is no way to estimate the current value. Who’s to say the recent sellers didn’t put numerous updates into the home while they owned it.

The real estate market is constantly changing in cities, their communities, and even down to certain streets. It can even be specific price points in an area vs. other price points in the same community. 

The recent transfer prices of nearby sold homes are also helpful for home buyers and sellers. These comparable sales make up a major factor in how a local real estate agent will price a home. Comparable sales can only be viewed as apples-to-apples when valuing a home. If you are calculating a value for a century home, a newer home that recently closed five houses down the street is not a valid comparable for the older property. 

Zestimates Often Work In Cookie-Cutter Communities

If your Ohio home is very similar to all the other homes in the neighborhood comparable sales may be viewed as apples to apples. An example would be a big builder housing development of reasonably priced homes. No one has renovated the properties.

But if you are in an area where the age, size, or options vary, comparables quickly become an apple to banana situation: both fruit, but very different kinds of fruit.

Zillow Tells You A Zestimates Accuracy Is Off

Zillow informs consumers that Zestimates may not be accurate. The problem, however, is that most buyers and sellers never take the time to research or see the disclosure. 

Most home sellers and buyers don’t understand that Zillow provides Zestimates for over 100 million homes in American, making it impossible for them to predict the value of every house accurately.

Homebuyers and sellers need to understand that Zillow does not know what has been done to individual homes or similar dwellings. Some may be falling apart, where other homes are entirely updated. What if a roof is in need of replacement or there are structural issues. Home values are unique to each situation, and humans can calculate these variables where algorithms can’t.

Smart Agent Vs. Zestimate

The way a Savvy Realtor determines a home’s value is different than how Zillow does it. Local real estate agents or even a professional appraiser understand how one comparable sale relates to the next. Smart agents are used to comparing unique homes in a single neighborhood to get an accurate price for buying or selling a house. Zillow automation does not have this kind of human ability, which is why a Zestimate can be off when providing a home value. 

Accurately valuing a home is an art and science. It is not accomplished very well by trusting a computer-generated value, whether Zillow or some other online valuation tool.

If you want an accurate value of your home, consult with a local real estate professional or competent appraiser by calling or texting (440) 628-1321. You can also contact us here.

Here are some other articles our clients found helpful

5 Things To Consider When Pricing Your Home In Broadview Heights

The Step By Step Guide To Correctly Pricing Your Home In Broadview Heights

The Top 5 Mistakes Sellers Make When Selling a Broadview Heights House

5 Things You Should Know About Pricing Your Home In Broadview Heights

How To Avoid Over Pricing Your Home in Broadview Heights

Step By Step Guide For Pricing Your Home Correctly in Broadview Heights

5 Proven Ways to Sell Your House for More Money in Broadview Heights

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