The Trouble with Online Real Estate Estimates

Zillowlogo_colorIf you’ve spent any time in the home market—buying or selling or “just looking”—you’ve probably been to Zillow’s website. Its trademarked Zestimate tool seems like a handy way to research homes in a given area; you can compare similar properties on the same street or from neighborhood to neighborhood. But what many people don’t realize is just how inaccurate its automated estimates can be.

As a real estate professional, I have experienced the disappointment and frustration Zestimates can cause when outcomes don’t match the estimated amounts. One recent article reported that Zillow’s official nationwide “median error rate” is 8 percent, but studies of specific markets show error rates that are often much, much higher—for example, 19.9 percent in Manhattan; 11.6 percent in San Francisco; and 42 percent in Somerset County, Maryland.

Even at the nationwide level, 8 percent can be very significant: 8 percent of a $750,000 home is $60,000. So if you’re using Zestimates, you might be tempted to over-price your home by a considerable amount, and then wonder why buyer offers don’t match your expectations. Or, you could be underpricing your home and shortchanging yourself. This is not to say the factors Zillow takes into account aren’t important—house size, the number of beds and baths, taxes, the lot size and recent closings in the area all do affect a property’s price. They’re just not the only things that affect it.

I often tell my clients: Zillow has never walked through a house. It can’t tell what condition a home is in. And this is, in my opinion, the biggest part of the pricing equation that property sellers and hunters fail to take into consideration. You can’t rely on stats and photos alone when determining one home’s value as compared with another. The firsthand assessment of a house’s condition, its surrounding yard and streetscape—that subjective perspective weighs heavily when calculating a listing price relative to the neighborhood.

If you want the most accurate snapshot of what homes in our Miami neighborhoods are selling for, you need a trusted real estate expert who can provide reliable, current data you can use to make smart decisions. You won’t need to calculate an estimate—you’ll have exact numbers at your fingertips.