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%.
Now don’t get me wrong, my calling out of the inaccuracy of Zestimate’s off-market pricing is not a dig at Zillow. I am a big fan of Zillow, it’s marketing capabilities, and the forethought the company has to how real estate will be acquired in the future. As an agent, landlord, buyer and seller I too use Zillow and the innovative tools it offers it’s visitors. Homeowners and buyers have become accustomed to the process of engaging with Zillow before they even think about engaging with a real estate agent or lender. Because of the technology and simplicity Zillow provides, sellers can do their own homework on the potential list price of their property compared to other properties in their neighborhood. Buyers are able to visually see what homes they may be interested in purchasing or not purchasing. These are all actionable steps that help an agent down the road when the listing and buying process beings.
There is a gap though. A gap of about 7.5%. On a $400,000 house that 7.5% error in pricing is $30,000. Would you buy a home that is listed $30,000 more than it’s true value? I would guess not. Data goes like this….. junk in, junk out and Zillow’s data shows just that while they are using the information that is currently available to them. So while Zillow is gathering more accurate input, Zillow is working toward delivering a more accurate output. But until the day comes that Zillow can close that 7.5% gap, it is your real estate agent that is going to get you to a listing price that aligns with the market and your objectives.
When working with my clients, Zillow is always a discussion. I come to the table with my numbers and my sellers comes to the table with their (aka Zestimate’s) numbers. It is my job to help my client see the true value in their home. Zillow only uses data, they don’t take into consideration the amount of funding that is going into your community to build new schools, or the concrete plant that is being built between your million dollar home and that breathtaking mountain view that adds a significant premium to your home’s value. Real estate agents are equipped to advocate for their clients, to do the in-depth research that Zestimate cannot and establish realistic prices. Continue to use Zillow and Zestimate, but know that your agent is necessary in helping you set a fair-market price and navigate the process of negotiating against that price.