Have you ever gone on Zillow to check the price of your home? They call this tool the Zestimate! You might have used this tool, even if you have no plans to sell your home. The real value of your house is definitely an important number when you are planning your investment portfolio. You want to know, just like your credit score, or the value of your car. Zillow is the number one real estate website for consumers on information for homes.
Below is the chart listed on the Zillow website, that can be found here.
In Riverside, only 43% of Zestimates® are within 5% of the properties actual value. Priced too low, and you cold lose thousands of dollars on your house. Priced too high, and you could risk not selling your home.
What can I do with this information? Do what Zillow says it is (but not promoted), a starting point. Early on in pricing discussions, it could provide a good ballpark figure of your home value, but do not get set on that number to be your asking price when the home goes on the market. It might be tempting if that number is thousands of dollars higher than what your real estate appraiser is telling you.
It doesn’t mean that Zillow and other sites like it are completely useless tool. I am just trying to shed some light on how to view this data and what it means for you and your real estate transaction.
Watch out for the Zestimate®
Zillow is the most popular real estate website online today. Reports of around 120 million unique visitors in the last period. This has led to good and bad things for the real estate consumer. The site features a “Zestimate” of your house that has led to a conflict over home prices
It Is Not the Bible of Home Values
Don’t let this price be a reason your home doesn’t get sold. Trust real estate professionals, even though it might mean the asking price is lower than the Zestimate®. Consider an appraiser or real estate specialist for an accurate home evaluation.
Median Error Rate
Just how far off are the Zestimates given on Zillow? Zillow CEO Spencer Rascoff answered that they’re “a good starting point” but that nationwide Zestimates have a “median error rate” of about 8%. On a $500,000 house, that would be a $40,000 disparity. In fact, Rascoff owned a home that sold for much less than his own Zestimate tool!
The Zestimate tool is not a good resource for luxury and high end properties. You run into more “non-quantifiable facts” on certain properties.
Even though the median error rate is said to be 8%, reports have show this number to be higher in other markets. Causing an even greater disparity in price between buyers and sellers.For example, in New York County — Manhattan — the median valuation error rate could be has high as 19.9%.
Based on the information about Zestimates®, it does not give much reason for confidence in their home evaluation tool. Yes, Zillow says its a “starting point”, but all the information about the true stats of their tool is not prominently shown. You gotta search for it at the bottom of their home page in small text.