Have you ever searched for your own house on Zillow? If you did, you might see a Zillow estimate, which provides a value for what your home could be worth if you decide to sell it. For homeowners looking to sell their properties in the near future, this estimate could be an exciting number, forecasting potential profits. But how reliable is it? Can you really get that much for your current house?
A few years ago, Zillow used to base its estimates on quantitative data like the number of bedrooms, the year the house was built, and its square footage. Recently, the company has made some improvements to its algorithm.
Don’t take these numbers at face value. It’s important to know where Zillow estimates come from and how to accurately gauge your home’s value. Here’s what you need to know.
What is a Zillow estimate?
A Zillow estimate is an automated home valuation tool that provides an estimate of a home’s market value. Also called a Zestimate, it’s based on public and user-submitted data and incorporates home facts, location, and market conditions into its final calculations.
Zillow is clear that the Zestimate is not an appraisal and cannot be used as one. However, it also claims that the median error rate for Zillow estimates of on-market homes is only 2.4%. This varies significantly by city and state. Colorado Springs is said to only have an on-market median error rate of 1.20% while the error rate in Boston is 3.24%.
These error rates might seem small, but they highlight how unreliable your Zillow estimate can be. In Boston, only 68% of homes sold fall within five percent of the estimated sales price. Compare this to Colorado Springs, where 91% of homes are sold within five percent of the estimated sales price.
Five percent is a big deal in real estate. A house that sells for five percent less than $400,000 closes for $380,000. Plus, most sellers pay between five and six percent commission on the sale of their homes. If they base their estimated home value on Zillow’s number, they could make far less on their home sale than they expect.
Additionally, the off-market error rate nationwide is 7.49%. If you haven’t listed your home for sale yet, this is the number you want to look at. You can’t guarantee that your home will list for Zillow’s estimate, especially before you upload new photos, information, and data into the MLS.
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Zillow uses proprietary algorithms that incorporate data from brokerages and multiple listing services to calculate its estimates. Additionally, it includes features like the number of bathrooms, location, square footage, etc. To ensure you get an accurate estimate, the company includes details like the listing price of comparable homes in your area, tax assessments, and prior sales records.
For example, if you own a four-bedroom, three-bath house on a half-acre of land, Zillow will look at similar homes in the area and see what they recently have sold for. The website will consider what your home sold for in the past, how the market has changed since, and the year your house was constructed. If your next-door neighbor has the same house structure as you and their house just sold for $500,000 then your Zillow estimate will likely fall close to this amount.
Not all listings have the same amount of data. There may be gaps in information from one property to the next. This will affect the Zillow estimate for your house and other properties in the area because the algorithm has to guess the information rather than use concrete data. The more guesses the algorithm makes, the greater the margin for error.
Zestimates are also highly sensitive to market trends. If the real estate market in your area is highly competitive, then the Zestimate for your property will continue to rise.
On a macro level, the accuracy of Zillow estimates is pretty high. It’s impressive that an algorithm can estimate home values on a national scale within a 2.5% margin of error. However, most home sellers are concerned about the accuracy of Zestimates on a micro level. Is your house really worth what Zillow thinks it is?
This is a non-issue if your house is on the market. When you list your property on the MLS, Zillow updates the target sale price. When you close on the home, the sale data contributes to the Zestimate.
However, issues of accuracy pop up when you are looking at off-market listings of your home. Zillow has no idea what you have done to the property in the time since you closed on the home. You might have built an addition that increases the number of bedrooms and bathrooms. You might have neglected your roof and stained your carpeting, which reduces the overall value of the house.
Additionally, this algorithm is still learning. There are a few hiccups that might cause Zillow to over or undervalue your property. For example, it is very difficult for the algorithm to tell the difference between a painted floor and another one that is fully furnished. It might not be able to tell the difference between hardwood flooring and laminate materials. This is true for any online valuation tool such as Redfin or Realtor.com.
Your Zillow estimate can give you a ballpark figure for what your home might be worth; however, it should only be a starting point in your research before you list your home.
How to Check a Zillow Estimate
You can find the estimated value of a property on both the app and desktop interface of Zillow. Start by searching for a property address, regardless of whether the home is on the market or not. If the property is on the market, Zillow will provide a listing price – no Zestimate is needed. When the property is off the market, Zillow will provide a Zestimate for what it could be worth.
If you don’t have a specific address in mind, consider browsing homes within a general area. Zillow will show you on-market properties, but you can zoom in to see off-market estimated listings. In the desktop interface, you can hover over different homes to see their square footage and the number of bedrooms and bathrooms available. This is a great way to see how home values change based on size, property, and amenities.
If you aren’t ready to sell your house right now, you can periodically check your Zillow estimate to see how it has changed. Zillow might increase or decrease this number based on data from nearby homes.
Is a Zestimate high or low?
The accuracy of your home’s Zestimate will vary based on a few factors. The first thing to consider is when you bought the property. If you recently purchased your home within a year or two, the Zestimate might be higher than expected. The housing market has been hot and unpredictable for the past few years, which means home values have jumped up as buyers fight for properties. The algorithm might take the current trend of home value growth and continue to increase your estimated price based on recent demand.
If you have lived in your house for more than a decade, your Zestimate might actually be lower than it should be. This is because the algorithm is relying on sales data from a long-ago market. While Zillow’s system will focus on amenities and try to increase the home value based on current trends, you may find that your home is valued for less than your neighbors, just because you haven’t sold it recently.
Zillow is always working to improve its estimates, which means you might see changes to your Zestimate even if you don’t update any data on your home or if the market hasn’t changed significantly in your area. The valuation could be affected by how the algorithm is tweaked, either adding or removing value to your house.
This further highlights how you shouldn’t rely on the Zillow estimate when you are deciding to sell your house. The smallest changes can significantly affect its pricing.
How can you get an accurate valuation for your home?
Technology has come a long way over the years, but the best way to understand the value of your home is to work with human professionals. Many of today’s Realtors use a mixture of algorithmic data and personal experience to determine what a home is worth.
These agents want to hit the “sweet spot” when estimating the value of a home. They want to get as much money as possible for their client (which maximizes their commission) while also keeping the price competitive enough that it attracts buyers. If a home is overvalued, it will sit on the market until the seller drops the price, which is frustrating for both the agent and the homeowner. If a home is undervalued, both parties could have earned more on the sale.
To make sure you are listing your home for the right price, interview multiple Realtors and invite them to see your home. You should meet with at least three agents before you choose one anyway, and each Realtor should provide a market analysis and target price for your listing. You can also hire an appraiser to evaluate the property, but you may have to pay a hefty fee for their services.
With this data in hand, you can decide on a fair price to list your home if you want to sell it quickly while turning a profit.
Can you rely on Zestimates if you are a buyer?
If you are planning to sell your home and buy in another area, you can use Zillow estimates to understand the current market. Home prices can vary significantly depending on the neighborhood and region. For example, you can find houses in Sacramento for less than $300,000 in some areas and more than $1 million in others. Even if the Zillow estimate isn’t completely accurate, you can use it to get a feel for home prices in various areas.
Zestimates can also help you understand whether or not a listing is overpriced. Look at a neighborhood where most homes sell for $400,000. If a property is listed for $600,000 and it matches the same size and amenities are other houses, it might be overpriced.
Zillow estimates are meant to provide information for buyers and sellers. While these numbers aren’t set in stone, they can give you an idea of macro trends and how neighborhoods are changing over time.
Hire an Experienced Realtor to Sell Your House
Even if you have a hot seller’s market in your area, you can’t rely on Zillow estimate results to price your home. You need a real estate professional to guide you through the home valuation and marketing process. You can also work with a professional appraiser to assign a value to your property.
If you are ready to sell, turn to the experts at UpNest, which is owned by parent company Realtor.com. Our no-cost service helps home sellers and buyers find the best real estate agents locally. The UpNest platform allows you to compare multiple agents in your area so you can read reviews, commission rates, previous sales, and more.
We analyze thousands of local agents and find the best ones to compete for you! Try UpNest today so you can spend more time selling your house and less time finding a Realtor to hire.
Are Zillow estimates accurate?
Zillow estimates are not meant to be used as definitive values for your property. They are guides to help you understand what similar homes are worth within an area. You can check Zestimates when you first decide to buy or sell, but make sure you rely on concrete MLS data for making decisions.
Is Redfin or Zillow more accurate?
Neither site is perfectly accurate for home estimates, but Zillow is generally considered the market leader for home estimation services. Zillow’s service also provides more estimates than Redfin’s does, which allows Redfin to be more accurate, especially for homes that have been listed recently.
How accurate is the Zestimate? The nationwide median error rate for the Zestimate for on-market homes is 2.4%, while the Zestimate for off-market homes has a median error rate of 7.49%.
How accurate is a Zestimate? Zestimates are generally quite accurate. The median error rate for the Zestimate of U.S. houses on the market is just 1.9 percent. The median error rate for houses that are not on the market is higher, at 6.9 percent, but still close enough to do your preliminary planning.
What Can Cause Errors in a Redfin or Zillow Home Value Estimate? A common reason for inaccurate estimates is outdated information. For example, if you have made major additions or renovations that don't show up in the data that Redfin or Zillow have collected on your home, then their estimates may be too low.
Both Zillow and Redfin give homes an approximate value, but the Zestimate provided by Zillow has proven slightly less accurate than Redfin's estimate. Final numbers depend significantly on the local market and demand for a property in your particular location.
How accurate is a Zillow estimate? On a macro level, the accuracy of Zillow estimates is pretty high. It's impressive that an algorithm can estimate home values on a national scale within a 2.5% margin of error. However, most home sellers are concerned about the accuracy of Zestimates on a micro level.
1. Redfin. The most accurate home value estimator is Redfin as it uses historical pricing data and also considers real-time demand and market trends. Redfin estimates are more accurate than Zillow, and the interface is intuitive, making it easy to find exactly what you're looking for.
Several studies demonstrate that it's possible Zillow can be accurate within 80-90% of the value of a home. This means that its estimates can be a good starting point. However, when you want to price a home to sell or know what a home is worth so you can buy now, its numbers are not accurate enough.
How Accurate Is Zestimate vs Appraisal? A professional real estate appraisal is far more accurate than a Zillow Zestimate. You should keep in mind that Zestimate is just an estimate based on available data, and will often miss vital information on a home's condition and renovations.
It's likely that all homes have a lower estimated Zestimate than actual value. So, on the basis of time frame, Zillow is picking bad comparables. If your Zestimate includes homes that were sold over 3 months ago, that's going to be one key reason your Zestimate is so low.
Is Realtor.com or Zillow more Accurate? This is another frequently asked question from home sellers and buyers. The main difference between Realtor.com home values and Zillow Zestimates is that Zillow uses its own program to create a Zestimate, while Realtor.com uses several 3rd parties to provide multiple home values.
To calculate a Zestimate, Zillow uses a sophisticated neural network-based model that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages. Neural networks are artificial intelligence systems that imitate how the human brain works.
By spring of 2021, the market had overheated to a point where Zillow's much-lauded algorithm, the backbone of its home-flipping strategy, was struggling to make accurate pricing predictions. Believing its own inflated numbers, say analysts, the company began overpaying for homes all across the country.
If your Zestimate is off, it might be because Zillow is missing some information about your house. Fill in the gaps by accurately describing the features of your house, checking off all of your home's amenities in your profile, and reporting any updates to a tax assessor.
Zillow is the best overall home value estimator available. It is user-friendly and requires no log-in details. Its home value estimator is called the Zestimate, which provides an approximate value for your home based on public and user-submitted data.
Most of the time, Zillow and Redfin have different estimates for your house because they have slightly different approaches to calculating home values. However, if there's a big gap between your Zestimate and Redfin Estimate, it may mean that one company has inaccurate information about your home.
You can determine home value by using an online valuation tool, hiring an appraiser, using a real estate agent, or checking comparable homes in your area. Using an online valuation tool or pulling comps in your neighborhood is easy and quick, but you'll receive more accurate results using a REALTOR® or appraiser.
Websites like Zillow, Redfin, Trulia, and Realtor.com are some of the many real estate portals that will present a value estimate when you search an address. These sites also provide automated valuation models, or AVMs, to calculate property values.
In determining what makes a good estimator, there are two key features: The center of the sampling distribution for the estimate is the same as that of the population. When this property is true, the estimate is said to be unbiased. The most often-used measure of the center is the mean.
If you see a home's price on Zillow (or other sites), is it typically negotiable and the seller/realtor priced purposefully higher? Depends entirely on the market, but yes, it is negotiable. In much of the world, the asking price is the hoped for price, and you are absolutely free to put in a lower offer.
It is not an appraisal, but it does provide a ballpark range for your home's value. Our current median error rate for Zestimates nationwide is 4.5%, which means that half the time, the Zestimate is within 4.5% of the final sale price.
Since appraisals look at past homes sold and don't account for future prices, appraisals will often come in lower than the selling price. It would be like pricing a tank of gas based on what you paid for it yesterday rather than today's market conditions.
There's an acceptable variance when it comes to home appraisals. It usually depends on the prevailing market conditions. In markets with favorable conditions, the difference should be between 2% and 3% of the other values. For markets with challenging conditions, a 10% difference may be acceptable.
The Zestimate is often less accurate than your Realtor's estimate and can be thousands of dollars off. According to Zillow's Zestimate page, “The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 7.5%.
Some factors, such as property maintenance and improvements, are in your control. Other times, factors outside your control, such as the property market, natural disasters, and changes in your neighborhood, might be bringing down the value of your home.
If you are able to view the MLS in your area online directly, you will only see properties that are currently active on the market. This makes the MLS more accurate than Zillow, which frequently keeps properties listed as available long after they have been taken off the market.
While Zillow has 50-80 fields of information and pictures about the properties, an average MLS has more than 300. That means Zillow provides limited information about a property. In contrast, an MLS includes all the market times, listing information, photos, unsuccessful listings that date 10 to 20 years back.
The Redfin Estimate is highly accurate, with a current median error rate of just 2.10% for homes that are for sale, and 6.40% for off market homes. This means that when a home that is currently on the market sells, the Redfin Estimate will be within 2.10% of the sales price half of the time.
Zillow and Redfin's home value algorithms are more reliable for general estimates than precise ones. Both companies are very accurate — about 98% — when estimating within 20% of a home's sale price. But that accuracy drops to just 67-74% when estimating within 5% of the sales price.
Zillow's new search tool lets home shoppers find listings by a range of all-in monthly costs, instead of list prices. A linked calculator estimates monthly payments they could afford, based on users' down payment, income, and monthly debts.
No, but you can update your home facts and fix any incorrect or incomplete information to ensure that your Zestimate is as accurate as possible. If you update your home facts, you may not see your Zestimate change immediately.
Zillow, an online real estate marketplace, recently shuttered its Zillow Offers business because of failed iBuying algorithms. A derailed algorithm on property valuations led the company to reduce the estimated value of the houses it purchased in Q3 and Q4 by more than $500 million.
Often, these scams involve properties being listed for rent on the internet by scammers who do not own the properties or don't have the authority to rent the property out. Scammers often list properties on websites like Zillow, Craigslist, or Facebook. This scam can take different forms.
If you find a fraudulent listing on Zillow, please return to the listing page and click “Report Listing” and select “Listing seems to be fraudulent or illegal.” If you believe you have been scammed, report it to the FTC.
The algorithm that powers Zillow's signature home valuation tool — the Zestimate — is getting an upgrade. Now more accurate than ever, the new Zestimate uses computer vision to analyze photos of a home to understand not just its facts and figures, but its quality and curb appeal.
A virtual tour is a must-have and may actually help your listing get more views and saves. Based on data collected between November 2021 and January 2022, listings with a Zillow 3D Home® tour got, on average, 43% more views on Zillow and were saved by buyers 55% more than listings without.
Zestimates for all homes update multiple times per week, but on rare occasions this schedule is interrupted by algorithmic changes or new analytical features.
Home value estimators like Chase's are usually not accurate or reliable enough to make a major financial decision like setting a list price on a home. But they can still be useful for an idea of what your property is worth.
You can't directly change your Zestimate, but you can influence it by updating your home's information. To update your Zestimate, you need to claim your home on Zillow, then update key information such as number of bedrooms, bathrooms, and square footage.
Active listings will show a Time on Zillow counter, as well as the number of Views and Saves for a property. When viewing an active listing, the total number of Views and Saves displaying on the listing includes the number of views and saves from the past 30 days the home has been on the market.
If your home has more value-factors (bigger square footage, better condition, more amenities, etc) than the comparables that are pulled, then your Zestimate is likely to be lower than actual value.
There's an acceptable variance when it comes to home appraisals. It usually depends on the prevailing market conditions. In markets with favorable conditions, the difference should be between 2% and 3% of the other values. For markets with challenging conditions, a 10% difference may be acceptable.
Is Realtor.com or Zillow more Accurate? This is another frequently asked question from home sellers and buyers. The main difference between Realtor.com home values and Zillow Zestimates is that Zillow uses its own program to create a Zestimate, while Realtor.com uses several 3rd parties to provide multiple home values.
Most of the time, Zillow and Redfin have different estimates for your house because they have slightly different approaches to calculating home values. However, if there's a big gap between your Zestimate and Redfin Estimate, it may mean that one company has inaccurate information about your home.
How Accurate Is It? The Redfin Estimate is highly accurate, with a current median error rate of just 2.10% for homes that are for sale, and 6.41% for off market homes. This means that when a home that is currently on the market sells, the Redfin Estimate will be within 2.10% of the sales price half of the time.
Demand has long exceeded supply of homes for sale in California, and that's especially true now. But while many families are suffering the economic impacts of COVID-19, wealthier households with money to spend and capitalizing on low interest rates have driven up prices even more.
As a home buyer, you have every right to offer less than the asking price if you feel it's too high. On the other hand, the seller has every right to reject your offer, if they feel it's too low. So be sure to do your homework and tread carefully.
That said, most appraisals are in line with the selling price. On average, only one in 10 home appraisals come in low, but this can vary from region to region. If your house ends up in that 10%, here are some potential reasons why.
How Accurate Is Zestimate vs Appraisal? A professional real estate appraisal is far more accurate than a Zillow Zestimate. You should keep in mind that Zestimate is just an estimate based on available data, and will often miss vital information on a home's condition and renovations.
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