The LA Times recently published an article on the accuracy of “Zestimates”. The article discusses how both buyers and sellers attempt to use the computer-generated values as deciding factors in both listing and buying real estate. But, is the data, given away for free, accurate?
Zillow CEO, Spencer Rascoff is quoted saying nationwide there is an 8% median error rate. Locally, we too often have clients concerned about the “zestimates” of a potential property. At times in our local market we see these values off by 40%. Even if we were only worried about Zillow’s quoted average error, it would translate to more than $100,000 of difference in value for the average Park City home.
Why the discrepancy?
Utah is a Non-Disclosure State, which means transaction prices are not public knowledge. In fact, Zillow rates Utah as its “Least Accurate” rating for zestimates. Further the Zillow algorithms need large amounts of data to tighten their accuracy levels and Park City, simply doesn’t have enough properties for their equations to work. Finally, our market can see large variations in value over small geographic areas, which presents another hurdle for the Zillow algorithms.
A Zestimate is not an appraisal. From Zillow.com – Is the “Zestimate” an appraisal? No. You will not be able to use it in place of an appraisal. A Zestimate is a computer-generated estimate of the worth of a house today, given the available date. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.
So, what should you do with the “Zestimates” you find for your home or a home you are interested in? Talk to a real estate professional. We’ll use our tools and experience to determine how much you should list for or how much that home that has your eye may be worth.