Do you flip through Zillow, watching homes and checking Zestimates? Do you sometimes wonder how one house estimates high when a similar home is much lower? Zillow has changed the game when it comes to information. And that includes pricing. But, use caution when looking at Zillow to determine the price of a home in Idaho. Sometimes the estimates are right on. Other times they are way off. The problem is you never know. Did you know that by its own admission, at least half of all Zillow’s estimates are off by 4.6% or more[1]? Zestimates are not intended to be the final say. “It is a starting point in determining a home’s value and is not an official appraisal.” This comes directly from the Zillow website.They admit it. And acknowledge that their own estimate should only be a conversation starter. Zillow also recommends that buyers and sellers connect with local professionals for help. Pricing a home accurately is the result of several opinions and sources. Here are few things to consider when looking at Zestimates.
Zestimates are based on the information that others provide to Zillow. This could be MLS data or data provided by users. However, from Idaho, Zillow is not receiving all the information. Idaho is a non-disclosure state. When a home sells, the buyer and seller are not required to inform the public of the final sales price. Sometimes they do and sometimes they don’t. This creates an information gap that can affect final results. Other information missing from a Zestimate is what is going on outside of typical data. Has there been major upgrades to a property? Is the home located in a high traffic area of the neighborhood? Is there a new development going on up the street or did the city rezone an area nearby? A colleague I work with always asks, “Has Mr. Zillow walked through that home recently?” If not, you will need more info to get a good price with any confidence.
Zillow rates its Zestimate accuracy on a scale of 1-4. Idaho is a 1, the least accurate rating. It either uses tax assessed values or “unable to compute Zestimate accuracy”[2]. When was the last time a tax assessor walked your home and noted the updates and improvements?
Recently, we saw a home that sold in Eagle for $242,500 on April 6, 2018[3]. The Zestimate on April 13, 2018 was $229,218, a 6% difference. But then it got stranger. The next day, April 14, 2018 it appears that the sold price was updated on Zillow. Naturally, the Zestimate would go up to reflect the current market price. Except it didn’t. It went down to $222,384, now 9% off the sales price. Clearly, something is off.
For higher priced homes it can be even less accurate. And no one is immune. Including Zillow’s CEO. In 2016, Zillow CEO Spencer Rascoff sold his Seattle home for $1.05 million. Zillow’s Zestimate of his home: $1.75 million.[4]
Zillow is a helpful tool to buyers and sellers. It provides a lot of public information in one place. Information that previously took an individual a long time to uncover. And if you are moving and want to get a feel for what an area home may cost, it can give you a good starting point. But if you want to know what a home is really worth, use a professional. Banks pay appraisers to do this. Real Estate agents do pricing everyday. Some even specialize in it. In the end, if you are serious about getting the right price of a home, Zillow can help get you close but a trained professional is probably your best option.
[1] https://www.zillow.com/zestimate/
[2] https://www.zillow.com/howto/DataCoverageZestimateAccuracyID.htm
[3] Sales data provided by Intermountain MLS
[4] http://www.inman.com/2016/05/18/zillow-ceo-spencer-rascoff-sold-home-for-much-less-than-zestimate/
