By Joedy Michael
Special to the Express
“I just checked, my home is worth $$$!” By now, it’s almost guaranteed that, in the past two years, you hopped on Zillow to see what your or someone you knows home is worth. The most popular tool is the Zestimate on Zillow.com. I mean, really, you can look up almost any home value across this country with the type of an address.
Cool, right? Although cooling down as of late, real estate has been the modern day gold rush in recent years and unfortunately, these estimators can be viewed as fact, but are complicated and often misleading.
Zillow’s “Zestimates” were launched in 2011 with information on about 90 million homes. Since then, it has expanded its reach and now provides data on more than 100 million homes. To determine Zestimates for those seeking home value information, Zillow studies a wealth of data points for individual homes. Zillow’s unique algorithm updates its collection of property values multiple times a week, and is based on information from both public data, industry data, and user-submitted data.
Zillow says, it “uses a sophisticated neural network-based model that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages. Zestimates also specifically examine: home square footage, location, the number of bathrooms, and other details. Active listing information like listing price, description, comparable homes in the area, days on the market and off-market data such as tax assessments and previous sales.”
According to Zillow’s website, the nationwide median error rate for the Zestimate for on-market homes is 3.2 percent, while the Zestimate for off-market homes has a median error rate of 7.52 percent. Zestimates are only as accurate as the data behind them. So, if the number of a home’s bedrooms or bathrooms, its square footage, any modifications or its lot size are inaccurate on Zillow, a Zestimate will also be inaccurate.
Take this example: Let’s say a home has a real market value of $600,000 based off an appraisal or an agent’s assessment. If the Zestimate is plus/minus 7.5 percent, the home Zestimate could be as high as $645,000 or as low $555,000. That’s an $90,000 swing.
There are many details that can affect the inaccuracy of Zestimates. Mistakes in key figures — like the date and price of the last sales. Comparable sales affect a home’s Zestimate, and a mistake in one home’s sales price record may affect the Zestimates of other homes in the area. Also, improvements not in the public record.
When a homeowner makes improvements or upgrades to a property, unless the local property tax authority has added that information to the public database and recorded it, Zillow can’t use it. Another variable is the housing turnover rate. The more home sales that occur in your area, the more data Zillow has to support its estimate — or lack thereof.
So, what to do? The bottom line is that there are many factors that can make the online estimators incorrect. The data points have room for flaws.
The good news? Our town and surrounding areas have great real estate professionals that are skilled in compiling predictive home values when listing homes for sellers and preparing offers for buyers. Great agents share the real story behind your home’s value, which in a changing market, is needed now more than ever.
Reach Realtor Joedy Michael at email@example.com.