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Zillow Accuracy Revealed

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A recent Wall Street Journal article took a look at the accuracy of Zillow home real estate value estimates and they found that Zillow was either accurate to within 7.8% with reality. The WSJ took 1,000 recent sales and compared the sale price with Zillow’s estimate (which didn’t reflect the sale) and found that it was within 7.8% accurate, evenly split on the high and low side. However, the average doesn’t tell the full story, what’s the standard deviation? Well, on 110 of the 1000, it was off by more than 25% and of the 110, 23 were off by more than 50%. Zillow’s nice and, as I’ve mentioned in the past, it’s only as good as the information it has – often times it doesn’t have the full picture.

The example in the article was 7600 sq. ft. four bedroom home that Zillow estimated to be worth $661,756 but was recently sold for $2.7M. Why the huge disparity? It’s in an exclusive gated community, something Zillow wasn’t aware of.

So, what’s the verdict on Zillow? Still a fun little tool that really doesn’t bring much to the table. Can you use it to get an idea of the value of a home? Sure, but I wouldn’t bet any money on it.

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38 Responses to “Zillow Accuracy Revealed”

  1. Jennifer says:

    Last time I looked at it for my neighborhood in west L.A., it was WAY off. Here you can go across the street and home prices jump hundreds of thousands of dollars.

  2. andy says:

    For my home, it seems to lowball because it is unaware of a finished basement and other enhancements to the landscaping and backyard. The basement adds 740 sq ft (1 bedroom, 1 bath, and a family room) – which a revised Zillow estimate says tacks on something like $50,000 to the price of the home (metro Denver).

    I doubt the home is worth what Zillow says, if only because they don’t know I have two big dogs, two cats, and two kids, all of whom have done their part to damage things. I’ll spend $5-10K just getting the home ready to sell when the time comes!

  3. i remember when zillow first came out, a bunch of realtors i know loved how inaccurate zillow was because it freaked out their potential sellers who now believed that their homes were worth so much they thought therefore created a sense of urgency to hire realtors to sell their listings. hmmm. i heard one of the reasons that zillow was (and i am not sure if this is still the case) inaccurate because zillow took data from public records which are generally not accurate since home owners generally don’t volunteer information such as new added bedrooms… obviously the error of margin is much better. but it’s true. i would take this type of info with a grain of salt. but they must be doing something right since somehow they manage to become a household name.

    cheers,

    cindy

  4. Hi, this is David from Zillow.

    Cindy — you’re right — we do rely heavily on public records to calculate Zestimates and those records can be incorrect or (more often) incomplete. So, we now allow owners to claim their house and post updated facts. Users can also use that new information to re-calculate Zestimates.

    • db says:

      HOW DO I GET MY HOME OFF THIS SITE??!!!!

      IT IS LISTING MY HOME WRONG AND I HAVE DONE THE ZESTIMATE THING BUT IT ONLY SAYS OWNERS ZESTIMATE…….

  5. Yan says:

    realestateabc.com would be their competitors.
    Also take a look at my-currency.com, they are taking bottom up approach at evaluations.

    • Larry says:

      I just looked at realestateabc.com and guess what they use as the estimated value for the home–you guessed it Zillow’s Zestimate! So somebody seems to like it. At any rate, you have to look at the Zestimate range they give not just the single value posted. These vary quite a bit do to uncertainty based on local factors. Also as mentioned above this value can greatly underestimate a house’s value if a lot of renovations have been made and not entered into public records. In the final analysis the Zestimate is jsut a tool, and like any tool its value is dependent on the user!

  6. Rachel says:

    Zillow has had the value of my home dropping like a rock since we purchased it a year ago. It is new construction and we bought it a the beginning of the bottom of the market. since we bought our home, we have since finished our basement adding 1,580 sq ft with bedroom, six closets and a full bath. We have added upgrades to the house as well, and six other homes in our new subdivision have sold for 20,000 to 90,000 dollars more than we bought ours. we are in the bethlehem, pa area. don’t trust this site, it is about as accurate as wikipedia!

  7. Allen says:

    Zillow is completely inaccurate in it’s values simply for the fact that it doesn’t take into account the home itself. It makes an estimate based on all facts and figures provided to it which yes, land value and comparable sales do count for something but in a neighborhood it recently showed one home valued $115,000 higher than one for sale 4 homes down the street. The home valued higher was a foreclosure property and had been TORN APART by the vacating former owners. The home down the street was smaller and was only a 3 bed 1.5 bath whereas the foreclosure property had a larger lot, and was a 4 bed 2.5 bath…that would probably need $100k worth of work to repair it. ALWAYS consult a realtor, always examine the property and do not trust Zillow’s estimates. This is just one of hundreds of examples. Also make sure you get a very, very thorough home inspection especially in New England where sewer drainage pipes can be broken under ground, a very expensive repair.

  8. ED FRACASSA says:

    With all the negative publicity in the real estate market, Zillow doesn’t help matters. For example I have a house for sale with the mnarket value of $330,000 whereas ZXillow has it deown for $269,000. My son has a house mkt value approx $550-600,00 – Zillow has it for $431,00 without the correct number ob bedrooms and bathrooms – go figure. The public
    is looking at Zillow Farce and playing havoc with real estate.

  9. Ryan says:

    Zillow is an awesome tool for those who understand how to use it. It takes the facts beds, baths sqft etc. and uses good statistics (multiple regression analysis) to assign values to all these variables and spits out a non-biased estimate. The estimate does not take quality into consideration, if your house is above average for you area the z-estimate will be low if it is below average it will be high. With this understanding of how it works I put much more faith in zillow then appraisers who’s process has no scientific basis, uses hand selected comparables and can use come up with any number they want to. Some houses will have issues because of neighborhood values but overall its a quick and easy way to find a deal.

  10. Dave says:

    Zillow is a fabulous tool when used with the full knowledge of its limitations. It does not have all the facts that will affect a true value.

    For the record, when I bought me house, the banks appraisal was almost an exact match to Zillow.

  11. Doug says:

    I’m suspicious that in the last month my house has gone up 65k, while the rest of the market crapped? I’m wondering if the banks, or some other business, is attempting to “rig” the system? Maybe in Zillows back pocket…something. The timing just seems very interesting to me.

  12. Tanja says:

    I bought a townhouse last month and Zillow’s estimate was only $2000 from the official appraisal… not bad if you ask me!

    I’ve found that Zillow is fairly accurate in the subdivision I live in because all of the homes here are so similar to one another and were all built around the same year. However when I look up the Zillow value of my parents’ house, the number seems to completely off. I think house value estimates there are difficult because neighboring houses vary in size, age, and upgrades to a huge degree.

  13. Mark says:

    I can tell you, at least for my home, it is laughable. I have about 2000 SF, finished media room, custom fireplace, 90 ft winding brick paver walkway, professional landscape, new windows, new siding, hardwood floors, granite countertops in kitchen, granite floors in bathrooms, SS appliances, and other (what I think is stupid, but listings always state, are crown mouldings, recessed lighting etc… and the listing??? $209K… oh, a built in pool (ok, it’s small, round but has full brick pavers and fence all around). Also, backs up to forest. The funny part is, I have been in neighbors homes, some Zillow rates at 300K or so, and, well, have a look for yourself… you’ll be able to spot mine based on the description. Look up Laurel Ct in zip code 60118

  14. Carolyn says:

    OMG. Mark, who cares?

  15. TLW says:

    Zillow shows our home value as $360,000. We had it appraised and it came in at $465,000. Zillow does not look at the house. Does not go into the house. In my opionion, Zillow is just a toy.
    TLW

  16. Elaine says:

    Is Zillow accurate? Well, if locating houses in places where none exist as they have done on my street is any indication of accuracy,I’d think not. My house is about 700 feet from an intersection and sits back about 100 feet from the road and Zillow has put my address virtually at an intersection in the road right-of-way. However, just my address is there–no house.

  17. mike says:

    I am in the market for a house and recently analyzed comps for a home I’m looking at. To my dismay, the value I came up with was 88% of ask. I was perfectly fair, accounting for comp price per square foot, upgrades, location, etc. I work with numbers a lot as part of my job so I’m pretty good with this kind of exercise. It was clear that the sellers were just nuts.

    Then I looked up the home on Zillow, and the “zestimate” was 87% of their ask…perfectly in line with the comps in the area. This home had no updates since its construction so that may have made the task easier for Zillow.

    I then compared the “zestimate” with my estimates on some other properties and still found reasonable level of agreement. Where it seems to be off is where additions were made to the house that it is unaware of (underestimates) or is more outdated/torn up inside than it realizes (overestimates). But all in all, it’s a good tool IF you can account for the likely variables it is missing.

    At the end of the day, however, nothing is better than looking at market comps yourself.

  18. Albert says:

    Zillow is at least useful for showing recent sales and the history of houses in your area. Our neighborhood recently took a dive because two fixer-uppers sold for low prices.

  19. Jen says:

    I just wish they would take my house off their site. It is not accurate at all! They list me as having 3 bedrooms and I have 4 and it was built that way. We have had a new built in library installed and a new outdoor kitchen with added patio and a retaining wall. Outdoor fireplace and all kinds of stuff. The price is way off and really don’t want everyone knowing how much my house is worth- even if it isn’t correct.

  20. g says:

    Helpful tool for research (as others say, as long as you understand it’s limitations). I have actually been surprised at its accuracy, considering that it is based on nothing more than database content.

  21. scott says:

    Does anyone know of an address were i can write and voice my concerns. I bought a house where one small house stood on three lots. the builder subdivided the property and built three new homes. Zillow keep the description of the old house for a while. There was a mixup with the home address. It had to be changed twice. i used their new tool and explained it was a new structure. resulting in the price being inflated. They finally got the right picture, right purchase price, but left the old price from the home that was demolished. I just refinanced, had it appraisedby three different appraisers.They all came back with-in 5,000 to 7,000 thousands dollars difference of the purchase price. I just want my information to be accurate.. when you pull up my address it shows open land with the price the builder paid. any information that could help would be greatly appreciated. scott

  22. Vivian says:

    In my opinion, Zillow is more accurate than many are willing to accept. Before the big crash, everyone said Zillow was wrong. I know this is hard to hear – but maybe they are brutally realistic?

    Even when their estimates are reportedly drastically different from formally conducted estimates – the truth is that many of today’s pessimistic buyers are not willing to pay that price. If that is true, how should one defnine ‘value’. A lot of it is about the perception.

    Let’s try something. Most homesellers and their agents use “formal” estimates to drive the listed sale price because it is wise to do so. However, once you have that number – take a look at the buying rates in your markets. In other words, search for trends in Listed vs. Sold prices. Redfin is a great site for this information.

    They provide the listed price versus the actual sold prices in a graphical representation for a specific neighborhood. In my neighborhood, in 2008 houses sold an average of 3% lower than the asking price. Today, houses are selling 16% lower than the asking price. If you assume that sellers and their agents had already adjusted for the falling market BEFORE listing the property, it means that buyers are pushing boundaries. They perceive the prices to be 16% lower on average than what sellers are asking for. If the seller’s price was based on the “formal” appraisal – then you can connect the dots.

    In summary – home values are based on perception. Perception is based on WHO is driving the market’s perception at the time. In this economy it is without a doubt a buyer’s market. Buyers perceive home values much lower than say formal appraisals.

    I agree that there is no excuse for bad pricing on bad information (i.e. wrong # of bedrooms, etc.) However – for those where the stats are correct, Zillow may be reflecting some of this in their numbers. It is a hard pill to swallow – yes. The good news – serious buyers who are looking at your home are also logical. If you have upgrades and features that you feel Zillow has NOT accounted for, those buyers will up prices to have those features. Again, it is back to perception.

    Thanks.

  23. Tom says:

    My hous is a two family house with two seperate street addresses 165 and 167. Zillow has my house listed as a single family house with one address……

  24. Anonymous says:

    There are houses in my neighborhood that Zillow valued at $10k below what they sold for.
    Mmmm, that is the real v. the theory, anecdotal as it may be, but as I expand my research I have found Zillow’s theory value is proven inaccurate over and over again in my town, then in randomly selected towns in my state, then in random streets around the country.
    It is as simple as finding sold homes and comparing their price and Zillow’s “value” estimation.

  25. Homeowner says:

    Zillow is a bad barometer for house values! So undervalue is their zestimate (25%-50%) … Zillow a disservice for seller and buyer alike. Your local experienced agent can best identify a homes value and, even so, if your home has features that put it above the rest — that is additional value to incorporate into pricing. There are no giveaways when a house is priced right and an educated buyer will see where they want to put their money … do they want the run down hut or the home that has been well-maintained with updated features … Zillow’s flat estimation methods can not possibly recognize the differences. A useless tool.


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