How much is my Portland home really worth? Zillow’s Zestimate says it is worth $z but my Realtor/appraiser/neighbor says it is worth $x. What gives? Any estimate of value is an opinion, the market eventually determines value.
Zillow provides their own answer as to what a Zestimate is :
How do we come up with the Zestimate?
We compute this figure by taking zillions of data points – much of this data is public – and entering them into a formula. This formula is built using what our statisticians call “a proprietary algorithm” – big words for “secret formula.” Currently, we calculate a Zestimate for more than 70 million homes and have data on 20 million more.
Accuracy is the next question. Zillow breaks down their accuracy by city. They score themselves 3 out of 4 in Portland and 68% of listings are within 20% of their actual selling price.
If you think your valuation is wonky, you can go into Zillow and adjust the statistics of you home and the system will then recompute the Zestimate based on updated information. Any valuation needs to be taken with a grain of salt, no matter what the source is. Zillow, like all automated systems, provides a baseline and a starting point to the conversation about what price the market will bear.
***Full disclosure: We advertise on Zillow. We are featured agents for the 97210 zip code and all of our listings appear as “Featured Listings” when property results are shown for a given search in any area.
I think cyberhomes.net is a much better tool. What I noticed about zillow is that it doesn’t take into consideration unfinished basements which our local market likes to add to square footage on RMLS. Heck, once I added the basement square footage to my house on zillow the zestimate of course shot through the roof. But unless the home owners in the same ‘hood do the same adjustment I am no longer comparing apples to apples and we’ve already discussed remodels, curb appeal and location re: zestimates
I can’t help but wonder how accurate the Zestimates could possibly be. It’s helpful that homeowners can manage their own home value, but how could Zillow possibly account for things like remodeling, number of parking spaces (for condos), views, and so on? It’s just like commenter Leigh said above – Zillow can’t know if you’ve finished your basement and your neighbors haven’t.
I have no beef with Zillow, and I definitely have had fun exploring home values in different areas. But at the end of the day, I just can’t accept their methodology.
I don’t normally like to post links to my posts, but I happen to have a whole little rant about this very topic here: http://realsavvyrealestate.com/preparing-to-buy-a-home/are-zestimates-really-accurate/
Personally, I have had clients who had Zestimates and wondered why mine was so much different (considerably, 30% difference). By giving consumers misleading/inaccurate information, it’s giving them a false sense of worth for the property. I think it’s a case where ‘a little knowledge is a dangerous thing’.