Errors Can Be 8% or Higher
Sites like Zillow and Trulia have revolutionized the real estate market. They combine technology and ease of use to get consumers more active in their journey to buy or sell a home. While technology has great benefits in modern life. That doesn’t mean it doesn’t have its challenges.
The reality of Zestimates
Zillow uses data to create Zestimates to estimate the value of property using many sources of public data. They use algorithms, which are mathematical equations that calculate and process data. Machines are processing the information. That may lead you to believe it’s more accurate; unfortunately, that’s not really the case here.
Because these are strict parameters there’s not room for the outliers of real estate. Every property is truly unique. Zestimates don't consider interior remodeling or upgrades or even energy efficient homes. These numbers cannot fully represent all the other facets of a property. With a thorough inspection of the property's condition, it's hard to be accurate. The data also may not be fresh. These numbers may be from several years ago, which skew their accuracy even more.
Zillow itself has said that Zestimates are "a good starting point" but that nationwide Zestimates have a "median error rate" of about eight percent.
So even though Zillow admits these numbers aren’t completely accurate, it still creates an expectation. After all, eight percent can be a large amount when considering a $500,000 property. If this is the Zestimate, the reality may range between $460,000 and $540,000. That is a large span. And it could be even larger depending on a specific market.
Talk to a professional before pricing
Consult with a real estate agent first. He or she will perform a thorough walk through to assess the condition. Then review relevant comps, and determine if any upgrades will be made before setting the listing price. Having the wrong listing price can cause major issues. Either in that you leave money on the table or price yourself out of the market.
The bottom line is that any information you receive from Zillow or other sites like it should be considered in context. After all, data without context isn’t accurate or actionable. That's why you need a professional agent. An agent will guide you and help you determine the best listing price.
If you’d like to receive an accurate estimate of your home’s value, provide us some basic information and will schedule a time to take a look.