5 Ways Zillow Can Be Wrong

May 30, 2019

I know it is fun to enter your address on Zillow and find out what your home is worth according to their “zestimate”. And the details about when the home was sold at how much price, it’s area, location...etc, are interesting. However, there are numerous reasons why that Zillow estimate could be wrong. Here are five.


1. Inaccuracy of Data


Based on both public and user-submitted data, Zillow's algorithms update its stored property values three times a week. But if the data is wrong (number of bedrooms, bathroom, square feet of the house...etc.) then the Zestimate will be off.

For example, if the tax record states your house has 2 bedrooms, 2 bathrooms with 1000 square feet but it really has 3 bedrooms, 2 bathrooms with 1200 square feet, that will throw off the numbers. Zillow handles the inaccuracy problem by reporting the “estimated value ranges” for individual properties. Meaning, not truly accurate.


2. Errors in Sales Prices or Property Tax Records


Part of the zestimate features the date and price of the last sale. This data formulates a large part of the zestimate and, again, it can be thrown off if this information is incorrect. And that impacts the neighboring homes as well.

Consider this, if a mistake exists in one home’s sales price record, it can affect the zestimates of another home in the area based on the comparables. Errors with property taxes paid, exceptions to tax assessments or a mistake in the tax collector’s database related to the basic information of property, can result in a too high or too low estimation of the assessed value.

Of course, owners of the house can report inaccurate sales data or tax records online to Zillow. But that would require all the neighboring homeowners to be aware of their zestimates and report any errors.


3. Upgrades and Unique Features Not Included


One of the biggest shortfalls of zestimates is Zillow has no way of telling how updated the home is. If the owner makes upgrades to the home, Zillow will not know unless the local property tax assessor is aware of it.

If you renovated your kitchen with beautiful tiles and modern amenities, but your neighbor’s kitchen is still the same as it was 40 years ago, Zillow will value both homes similarly.


4. Housing Turnover Rate


Zillow’s data accuracy ranges depending on the area where you live. The more homes sold in your area, the more data is collected about the home value. If you live in a hot area, there is more data. But, if you live where people sales are rare, you might find the accuracy of Zillow to be lacking.


5. Major Changes to the Zillow Algorithm


One last point to consider - when Zillow updates its algorithm, zestimates change significantly in spite of the fact that nothing has changed to the homes or the real estate market. According to the Zillow, the latest algorithm makes the estimator's national median error rate of 6%. That can add up quickly.


Don’t get me wrong. I think Zillow provides lots of useful data. However, the zestimates, according to Zillow, are really the starting point in determining the home’s value. The best way to ensure you have an accurate value on your home is to seek guidance from a local Realtor who understands your market and the nuances of your home.


And pricing your home correctly is vital! Check out more about the importance of pricing your home correctly HERE.



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