How Accurate is a Zestimate?
Posted by Tracy Jones on Thursday, February 18th, 2016 at 8:56pm.
Zillow has captured a large share of the market as a Real Estate Resource with much of its claim to fame being it’s trademarked Zestimate. The Zestimate is an automated method of obtaining a value of a property where the user obtains INSTANT results. The algorithm uses data from a number of sources to come up with a dollar value for a home. Many home buyers and sellers consider this gospel.
On August 19, 2015, I decided to embark on a test to determine how accurate the Zestimate really is and what financial impact it could potentially have on buyers and sellers of real estate. Granted this was not a University study worthy of a thesis but it was fair and random. Five single family homes for sale were randomly selected from the Venice Area Multiple Listing Service with the criteria that they must have been just listed. A Zestimate was done and printed at the same time. The homes were followed for months until they sold. Once sold, a comparison was done comparing the Zestimate vs. Sold Price. The results were astounding.
| PROPERTY | % ERROR | ERROR IN $ |
| Property #1 | 26% | $ 47,752. |
| Property #2 | 10% | $ 35,138. |
| Property #3 | 29% | $ 105,973. |
| Property #4 | 1% | $ 310. |
| Property #5 | 8% | $ 30,670. |
With buyers and sellers haggling over a few thousand dollars during negotiations, these error rates are an epic FAIL. With this said, what resource is available for buyers and sellers to make good real estate decisions?
Call a REALTOR®. Most customers want to wait until they are “really serious” before consulting a REALTOR®. Websites are a great place to begin a home search but when trying to determine values, you need the services of a REALTOR® sooner rather than later. Gulf Shores Realty offers confidential consultations at no charge where buyers and sellers can obtain professional opinions of home values. They can also receive strategic guidance to plan their real estate endeavor to ensure success.
Studies show that sellers who price their homes correctly spend less time on the market and actually obtain higher prices for their home. As homes get stale on the market, they have a smaller pool of buyers and generally receive lower offers. Buyers don’t want to overpay and should rely on a Comparative Market Analysis from a REALTOR® when considering a purchase.
Don’t rely on automated opinions to make your real estate decisions. Call Gulf Shores Realty at 941.488.6644 today.