Zillow is a leading real estate website that uses algorithms to estimate the value of a home. The Zestimate indicates what a home is worth. But is Zillow accurate? Unfortunately, many believe it can be inaccurate when calculating market value.
What is a Zillow estimate?
A Zillow estimate is Zillow’s estimated home market value. The Zestimate calculates the price a buyer should expect to pay for a home based on recent prices in the area, historical trends, and local MLS data.
To calculate the Zestimate, Zillow analyzes public records, including recent sales of homes around the subject property. They also estimate a significant factor influencing selling prices, like the cost of home repairs. They find the median historical sales price of homes in the area and then adjust based on expected home improvements, local market trends, and inflation.
Weighing the Evidence on if Zillow is Accurate
In general, there are two ways market value is determined by an appraisal or an online real estate website. When a home is sold, the actual sales price is compared with the online estimate to determine market value.
Appraisal-Based Market Value
If an appraisal is required for a home, then it will be determined by a real estate appraiser who will use industry standards and other criteria to determine the value of your home. Usually, appraisals are required when a home is sold or refinanced. However, they are also used even if the homeowner wants to know how much the home is worth.
The appraiser will look at comparable properties and sales in your area and make an educated guess about what your property is worth. They may consider the number of bedrooms and baths, square footage, competition from other homes for sale in your area, and local amenities. They may even include the value of add-ons.
These estimates are often helpful to home buyers, but they can be very different from the Zestimate. In some cases, the appraiser will estimate that your home is worth more than 10% more than the Zestimate.
Is Zillow accurate? When you see a Zillow estimate on the house, it is just one place where these estimates are calculated. Compared to an appraisal-based estimate, the Zestimate offers buyers a fairly neutral real estate value assessment. It is possible to pay more or less than they suggest. The Zestimate only indicates what a buyer can expect to pay and does not factor in other information, such as comparable sales in the area or any repairs that may be needed.
Zillow’s Zestimates are designed to provide a rough estimate of the value of a home in today’s market. They do not consider that the home will need to be sold again in the future, so they do not factor in any possible increases in property values. It brings the question, is Zillow accurate?
Is Zillow Accurate?
Zillow estimates use public data from real estate transactions to estimate the market value of a home. The accuracy of Zillow estimates is one area that should be carefully considered before relying on Zestimates to make a home purchase or sale decision.
Zillow says they study the history of sales of homes across the country and adjust their estimate based on that history. However, there is no guarantee that a Zestimate accuracy will reflect the market value of your home because this area is subject to change.
Several factors affect Zestimate accuracy, including:
It Doesn’t Take Into Account the Recent Upgrades or Any Structural Issues
Zillow can’t determine a home’s value regarding the market. The Zestimate does not consider recent upgrades or structural issues that might affect a home’s selling price. The Zestimate often does not account for future sales, improvements, or updates.
It Doesn’t Factor in Repairs
Zillow estimates how much a buyer would pay for a specific property. The Zestimate doesn’t consider the cost of home repairs that may need to be made in the future. For example, if the Zestimate indicates that a home is worth $300,000, but it needs $100,000 worth of repairs before it can sell for that amount, then home buyers will be unwilling to offer more than $200,000 for the property.
It Doesn’t Factor in Trends
Zillow uses past sale prices and housing market trends to determine a Zestimate for a house. If a home has recently sold for $250,000 in your area, but the estimates say that similar homes in the same area have sold for $300,000, then a house will not sell for what is indicated by the Zestimate. In this case, the Zestimate may indicate that the house will sell for a price that makes it difficult to find a buyer.
It Doesn’t Take Into Account All Factors
Zillow’s estimates do not consider many things that could be important to the final selling price of your home. For example, they do not consider the possibility of increased competition in your area or how well previous buyers were able to sell their homes for what they paid. If you are selling your house, it is essential to consider everything that could affect the sale price to get the most money for your home.
It Doesn’t Factor in Any Local Real Estate Data
Zillow’s estimates are based mainly on data available online and at the public record office. Data online can be out of date, or it may not be updated quickly enough to reflect a recent sale in your area. The Zestimate does not consider local real estate data, such as trends in sales or region-specific values.
Can You Trust Zillow Accuracy?
So, can you trust Zillow accuracy or not? According to many homeowners, Zillow’s estimates are less reliable than an appraisal for their homes. They don’t dispute that their estimates are based on public data, but they say they have become less accurate over time.
Many homeowners say the Zestimate is much less reliable than their appraisal. To find out what your actual home value could be, you can have an appraiser come to your home and look at it. The appraisal cost will depend on how complicated the renovations are and how much work needs to be done.
Why Use the Zestimate?
Now that you know Zillow isn’t as accurate as a home appraisal, why use it? The Zestimate is primarily intended as a tool for homebuyers who want an idea of what their home might be worth. While you can use it to decide if you want to list your home for sale, a more reliable estimate is available through an appraisal. An appraiser will survey the market and base an estimate on what other comparable homes are selling for.
It is important to note that Zestimate is only intended as a rough estimate of your home’s value, not a guarantee or prediction. Zillow says their estimates reflect sales of comparable homes in your area.
What Does Zillow Recommend for Home Buyers?
Zillow recommends that consumers consider talking with a local Realtor to get an accurate home value estimate before buying their first house. The most critical part of the estimate that a buyer can get from a real estate agent is a precise home value estimate. With the help of a Realtor, buyers can determine whether their home would be worth more or less in their neighborhood than an online estimate.
A real estate agent familiar with the neighborhood and local market conditions will also know how to prepare a home to sell quickly. With the help of a Realtor, buyers can get an estimate of their home’s market value at any point before they buy or sell it. The Zestimate may be helpful to consumers who are not aware that the Zestimate is often inaccurate for individual homes.
How Much Will an Appraisal Cost?
Appraisal costs largely depend on the house’s size. For single-family homes, a typical appraisal quote in Utah will be around $450-$500, but that price can vary widely depending on the appraiser and the area. Larger homes will cost more to appraise, while an appraisal of a multi-family home could be significantly more expensive.
How Accurate Is an Appraisal?
An appraisal objectively analyzes your home’s value based on similar listings in the area. It is considered the most accurate method for determining the value of a home. Appraisers use various local data to determine what your house is worth. They consider the size and condition of your home, market trends in your area, any recent sales in the neighborhood, and more. If you’re looking to sell your property quickly, they can advise you on how low you can ask for an asking price and still get it sold.
How Do You Challenge a Zestimate?
You don’t have to agree with your Zestimate and can always question the accuracy of Zillow’s estimates. You can dispute inaccurate information, including sale dates or pricing information errors, or if the algorithm incorrectly evaluates your property. You may also want to consider the size of your property, local market trends, and recent sales.
Although Zillow’s Zestimates are meant to be rough estimates, you can challenge them by providing more accurate information.
If you find discrepancies between your house and the Zestimate, it is essential to document any evidence supporting your case. Documenting information about comparable sales or estimating costs is relatively easy with most online property search tools
Learn More About Zillow Accuracy
So is Zillow accurate? No, but Zillow’s Zestimate is a helpful tool for homeowners, but it is not a reliable way to determine the actual value of your property. Instead, most homeowners agree that an accurate appraisal is the best option for determining the actual value of a home. If you’re thinking of purchasing a home, do yourself a favor and call us at 1-801-882-2292 for a no-cost home appraisal quote.