WHAT IS A ZESTIMATE?
The Zestimate® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions. Zillow encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:
- Getting a comparative market analysis (CMA) from a real estate agent
- Getting an appraisal from a professional appraiser
- Visiting the house (whenever possible)
Zillow also produces a Zestimate forecast, which is Zillow’s prediction of a home’s Zestimate one year from now, based on current home and market information.
The Zestimate’s accuracy depends on location and availability of data in an area. Some counties have deeply detailed information on homes such as number of bedrooms, bathrooms and square footage and others do not. The more data available, the more accurate the Zestimate.
DATA COVERAGE AND ZESTIMATE ACCURACY
Nationally, the Zestimate has a median error rate of 7.9%, which means half of the Zestimates in an area are closer than the error percentage and half are farther off. For example, in Seattle, Zestimates for half of the homes are within 6.6% of the selling price, and half are off by more than 6.6%.
HOW CAN REAL ESTATE PROS WORK WITH THE ZESTIMATE?
Real estate professionals sometimes get inquiries from prospective real estate buyers and sellers about the Zestimate. Understanding how the Zestimate is calculated, along with its strengths and weaknesses, can provide the real estate pro with an opportunity to demonstrate their expertise.
Millions of consumers visit Zillow every month. Most understand that the Zestimate is exactly that, an estimate of the value of a home. Occasionally however, someone will come along that insists on setting the price they are willing to buy or sell for based solely on the Zestimate.
Education is the key. As a real estate professional one thing you are always doing is educating your clients on all things real estate. The Zestimate is no different. Armed with an understanding of how the Zestimate is calculated and the Zestimate Data Accuracy table, you can explain – and show Zillow’s own accuracy numbers and talk about why the Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.
Source: Zillow.com