The Zillow Zestimate has been a tool for homebuyers and sellers for years now to get an idea of what their home might be worth. For real estate professionals, nothing has caused more heartache and distress than the Zillow Zestimate as it can sometimes lead to unreasonably high or low values which some buyers and sellers have attempted to use as ammo in negotiations. My purpose here isn’t to complain about the Zestimate figure, rather provide clarity from Zillow’s own words as to its accuracy.
In the third quarter of 2011, Zillow’s Zestimate was within 5% of the actual sales price 39.8% of the time, within 10% of the sales price 65.7% of the time and within 20% of the sales price 83.1% of the time with a 6.5% margin for error.
Here’s how this stacks up: On a home that sold in Charlotte for $200,000 home, they were within $40,000 of the sales price the vast majority of the time. The home could have been worth $160,000 or $240,000.
In Union county, the Zestimate was within 5% of the selling price only 39.8% of the time, within 10% just 65.7% of the time, and within 20% 87% of the time.
Gaston County values were lower with the Zestimate within 5% just 32.9% of the time, within 10% 50.2% of the time, and within 20% of fair market value only 72.2%. That includes a 9.8% margin for error.
Iredell county mimics Gaston’s numbers: within 5% of fair market value only 33.3%, within 10% only 53%, and within 20% 74.9% of the time with a 9.2% margin for error.
York county in South Carolina Zestimate accuracy is also similar to that in the rest of Charlotte area. In York, the Zestimate is within 5% of the sales price just 38.7% of the time, within 10% 60.7%, and within 20% of fair market value only 76.9% with a margin for error of 6.9%.
So what? Is the Zestimate no good?
Well, like all Automated Valuation Model tools, they can only be so accurate. Give anyone enough sales data and they can be within 20% of the selling price the majority of the time too. However, it is simply one piece of data. Physically seeing a home and properly assessing the home’s improvements and condition play a huge role in market value that no AVM can compensate for.
To find out what your home is more likely worth, contact either a local appraiser or Realtor. For homeowners in the Charlotte area, our team would be happy to come out, assess the home and give you an idea of what we could sell it for.