Zillow Zestimate Zaccuracy

September 26, 2013 | Buying

One of my daughters told me about a friend that negotiated a price on a condo she bought in Chicago based on the Zillow Zestimate of the value of property. Ouch!

Those zanny Zillow Zestimates (how much alliteration can I squeeze in here) are familiar to many of you. If not, just know that a “Zestimate” is Zillow’s term for their estimate of the market value of a home.

Now I love Zillow for many things and the Zestimate is very helpful if you are trying to size up the general price ranges in a neighborhood.

As an tool for determining the likely sales price of a particular home, however, it’s about as useful as using a fire hose to water your house plants. It is not the right tool because it does not give you the fine level of control that you need. Zestimates are just not very Zaccurate when it comes to any one property.

Let’s take a look. I did market analysis on three properties recently to determine their likely sales price. This requires me to look at nearby houses that sold recently as an indicator of the likely value of the home I’m hoping to sell.

Here are the nine recently sold properties I used in my analyses, what they actually sold for recently and what Zillow said they were worth:

AddressActual Sale PriceZillow Zestimate% Difference
15433 E Powers Dr$440,000$456,436+3.74%
15443 E Powers Dr$419,000$395,916-5.71%
5408 S Hannibal$385,000$418,162+8.61%
20033 E Wagontrail$219,000$187,555-14.36%
20280 E Red Rox Ln$207,000$204,769-1.08%
20026 E Bellewood$201,777$245,101+21.47%
1163 Detroit St$495,000$455,006-8.08%
1212 Fillmore St$442,500$480,213+8.52%
1312 Josephine St$392,000$461,598+17.75%

As you can see, relying on Zestimates for selling or buying a particular property is zanny. A buyer of 1312 Josephine Street would greatly overpay if using Zillow to come up with an offering price on that property. Likewise, the seller of 20033 E Wagontrail would ask way to little for her house if looking to Zillow for pricing advice.

On the other hand, Zillow does tell me that the general price range in the area of the first three homes is high $300s to mid-$450s and the price range of properties near the last three homes is mid to high $400s.

Even here, though, Zillow can let you down. The Zillow data on the middle three properties is suggesting a price range of $200k to $250K when lower $200s is more accurate based on the recent sales.

The moral of the story: Use Zillow and their Zestimates to get the big picture but never use Zillow to help you decide the value of a particular property. The latter requires several hours of detailed analysis by an appraiser or a skilled real estate agent.

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