I’m constantly asked how accurate are Zillow estimates, known as ‘Zestimates’, and I can’t tell you how many times I’ve heard a seller tell me ‘but Zillow says my home is worth $$$’.
For some reason, people have come to treat Zestimates as the defacto standard. Maybe it has something to do with our desire for instant gratification. In today’s internet-obsessed society, we want instant answers.
How accurate are they? Not very. They are better used as a starting point for determining value, not the endpoint.
According to Zillow’s own statistics (https://www.zillow.com/howto/DataCoverageZestimateAccuracyVA.htm), Arlington is one of their more accurate areas and they say their accuracy is within 5% of the sales price 75.5% of the time.
So, let’s think about that. For a $500,000 condo, 5% is $25,000, which means their Zestimate could be anywhere from $475,000 to $525,000. If you are the seller of that condo, you would see that as a pretty big price difference.
For Arlington, Zillow also says 7% of their estimates are off by more than 10%. For that same $500,000 condo, 10% is $50,000. So, 7% of their estimates would be under $360,000 or over $440,000.
However, sometimes the Zestimates are right on the money. People see the ones that are very accurate and are impressed - ‘Wow, they really got that one right. This tool is pretty good.’ The inaccurate ones are rationalized away - ‘Well, it’s just an automated tool and some of the data it is using is probably incomplete or wrong’.
It’s fun to check the values on Zillow, but just remember it is just a starting point.
The problem with Zestimates and other AVM’s (Automated Valuation Model) is there are too many qualitative data points to consider that are not part of the model, such as:
and there are a few data points that are more relevant to condos:
Because of these numerous, qualitative data points, an automated value model will always be suspect. They are getting better every day, but I’m not sure they will ever get to the same accuracy that a good real estate agent or appraiser can provide.
If you are thinking of selling and need an accurate value of your condo, contact me through this form here.