This is a common question I get as a Real Estate Professional. The best way to start is what exactly is a Zestimate®? We’ve all been to www.Zillow.com which is one of the #1 destinations for people looking at Real Estate on the Web. They compile data from both public and private sources to build a large nationwide database of property information. They then use a proprietary algorithm and run this data thru it to come up with an estimated value on each and every home, the Zestimate®.
The accuracy of the data totally depends upon what information the source they pull from actually collects and stores. Many do not have complete information even down to bedrooms and baths. Also, there is no comparison of the actual properties. Single family homes can be lumped together when one is a new modern super home in a gated community and another in an established neighborhood that’s 50 years old and never been maintained just because they share a zip code. Are these numbers valuable? Yes, for establishing a starting point or trend but not for setting a market price.
Using Zillow’s own data for Maui, the Zestimate® values land 38.6% within +-5% of the actual sales price or roughly 1out of 3 and 58.6% within 10% with a 7.3% Median Error. The Median Error is 50% of their values land within 7.3% of the sales price, 50% outside. When you are buying or selling real estate do you really want to be playing a 50/50 game? In their own words “Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”
Is Zillow worth looking at? Sure it is but as they say use it as a starting point, remember that 1 in 3 figure. Again using their words the Zestimate® “is not an appraisal. It is a starting point in determining a home’s value…We 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)”
If you want a complete explanation of how Zillow comes up with these values, go to their website www.Zillow.com scroll down to the bottom and click on Zestimates or follow this link http://www.zillow.com/zestimate/#acc . Zillow is a great marketing tool, but just that. It is one tool of the many it takes to successfully buy or sell a home. Do your homework then talk with your REALTOR.
Need a realtor? Call me, Dan MacDonell, at (808) 281-9588 or email at Dan@MauiHomeBuyer.com and I’d be happy to assist you.