When we go out to a home to inspect the property and meet the owners or agent, many times they end up asking us about the Zestimate they found on Zillow. Is it accurate? Does this number sound right? Sometimes, unfortunately, the Zestimate sets up high hopes for a value that is unrealistic, while sometimes homeowners are pleasantly surprised when the value comes back higher than Zillow guessed. This isn't too surprising when you think of Zestimates as just that: a guess.
A Zestimate, or AVM (automated valuation model), is a number spit out after the computer syste
m amasses all the data from recent market activity, plugs all of it into algorithms, and boom: home value. In an area of high real estate activity, with mostly tract homes and mostly arms length sales (that means no Short or REOs), the Zestimate can be very accurate. However, in almost any other type of area, it can be a shot in the dark. This article from the Washington Post states that "...our research shows that, on average, those 'Zestimates' are within 5 percent of the actual value of a home just half of the time. (Funny, that’s what its research shows as well.)"
One very important feature of value is condition. Has the home been maintained? Are the short lived items like the flooring, paint, roof , landscaping in good condition or are they lacking in quality. These things make a big difference and Zillow or Trulia or any AVM for that matter cannot take these things into condition. These things must be analyzed by a qualified Appraiser or Realtor.
We use Zillow at times for their market trend graphs, and to find rental comparables. They have some very useful features on their website-- but if you're looking to refinance or sell, our advice would be not to depend completely on Zillow. It's always better and more accurate to get an appraisal done by a real live person!
