More often than I’d like to admit, I’ve found myself swinging to highs and lows based on Zestimate figures. I know deep down it’s irrational since Zestimate is just an estimate of home prices and does not replace a real estate broker’s more realistic market assessment. But, when somebody publishes a number on your house, you almost feel like final judgment has been passed.
Well, true to form, Zillow has just released a report that compiles the results of an internal study performed to back test the accuracy of Zestimates against actual sales data. The results are surprising.
Where my gut feel has been that Zestimates gets close to within 10% of the actual sales price, Zillow’s own report shows that more often, the Zestimate is 20% off, with many cities averaging far above 10% errors. Still, rather than chastise Zillow for the failings of Zestimates, which are inherently limited by available data sets, I applaud Zillow for at least making an attempt to provide a “ball park” figure and be very transparent about it.
So, until Zillow can get all the data it needs and generate a far more accurate estimate, we’ll just have to continue using Zestimate as reality checks only. Hence, if you’re on the market to buy or sell a home, you should get the advice of a competent real estate broker who can provide you with real time market data. And, you’re looking for an investment property, find an advisor who can provide you with a full financial evaluation of the target property, since being heavily discounted does not automatically make a property into a good investment.