Whether you are searching for a new home, or searching to see what the market is up to, Zillow is considered one of the top 3 home search sites. Realtor.com and Trulia.com (for what it’s worth, Trulia is owned by Zillow) are the other two. Better yet, you should try Berkshire Hathaway HomeServices NE Properties brand new website to search.
The Zestimate is the cause of much frustration and angst by homeowners, home buyers, and Realtors® because of its inaccuracy.
From Zillow’s website:
To find this definition you need to look really close in small print on the bottom of the Zillow.com web page marked ‘zestimate’. Important to note they state it is NOT AN APPRAISAL and they advise you to contact your real estate agent and/or to get a professional appraisal.
Zillow also has information about how they determine the estimate and they provide data on their accuracy. Again, this information is not the easiest thing to find but it’s there. They provide accuracy data by top metro areas, state/county and even at a national level. The national level, who cares about that? What the average consumer cares about is their specific area.
That’s where this gets interesting. As of the date of writing this, Zillow’s information was last updated 8/8/2017. As of that date, in New London County, Zillow zestimates claim to be within 10% of the sales price 77.3% of the time. That means they are off 22.7% of the time. So, as an example, on a house that sells for $300,000, that’s a $30,000 swing in either direction.
That is quite a difference and a knowledgeable and honest agent would not tell any seller that if the current market value is $300,000 they should price it 10% higher to see what happens. Some agents might tell you this just to get you to choose them over the competition to list your home. Overpricing is another topic and should be avoided unless you’d like to have your home sit on the market for a while and then start a downward spiral of price reductions and ultimately sell for less than it would have if priced right.
The frustrating part for sellers is obvious. They find out the current market value from their agent and when they are stalking their home listing on Zillow’s website, they learn that there is a huge difference from the asking price vs. the zestimate. Sellers don’t want potential buyers to see this and be deterred.
As an agent, I know that if a potential buyer points out the zestimate I educate and explain the exhausting meaning of it and will do a market analysis of the property they are interested in.
What's important to remember, Zillow gets the property data for a house for sale fed to them from the MLS. They get JUST the property data that is entered in the MLS. They get town information directly from town data. Their zestimates are their own creation and we, as agents cannot edit them.