Zestimates – Why They are Not Helpful
Why a Home Buyer should never use them
What is a Zestimate?
Zestimate
The Zestimate® home value is Zillow’s estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home’s value and is not an official appraisal. The Zestimates are automatically computed daily based on millions of public and user-submitted data points.
Zestimates® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions. 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)
Zillow also produces a Zestimate forecast, which is Zillow’s prediction of a home’s Zestimate one year from now, based on current home and market information. Learn more about the Zestimate forecast.
*For more information on Zestimates directly from Zillow, Click HERE
From: the Los Angeles Times
By: Kenneth R. Harney
Date: February 2015
When “CBS This Morning” co-host Norah O’Donnell asked the chief executive of Zillow recently about the accuracy of the website’s automated property value estimates — known as Zestimates — she touched on one of the most sensitive perception gaps in American real estate.
Zillow is the most popular online real estate information site, with 73 million unique visitors in December. Along with active listings of properties for sale, it also provides information on houses that are not on the market. You can enter the address or general location in a database of millions of homes and probably pull up key information — square footage, lot size, number of bedrooms and baths, photos, taxes — plus a Zestimate.
Shoppers, Sellers and Home Buyers routinely quote Zestimates to realty agents — and to one another — as gauges of market value. If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers’ list price of $425,000. Or a seller might demand to know from potential listing brokers why they say a property should sell for just $595,000 when Zillow has it at $685,000.
Disparities like these are daily occurrences and, in the words of one realty agent who posted on the industry blog ActiveRain, they are “the bane of my existence.” Consumers often take Zestimates “as gospel,” said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village. If either the buyer or the seller won’t budge off Zillow’s estimated value, he told me, “that will kill a deal.”
Back to the question posed by O’Donnell: Are Zestimates accurate? And if they’re off the mark, how far off? Zillow CEO Spencer Rascoff answered that they’re “a good starting point” but that nationwide Zestimates have a “median error rate” of about 8%.
Whoa. That sounds high. On a $500,000 house, that would be a $40,000 disparity — a lot of money on the table — and could create problems. But here’s something Rascoff was not asked about: Localized median error rates on Zestimates sometimes far exceed the national median, which raises the odds that sellers and buyers will have conflicts over pricing. Though it’s not prominently featured on the website, at the bottom of Zillow’s home page in small type is the word “Zestimates.” This section provides helpful background information along with valuation error rates by state and county — some of which are stunners.
For example, in New York County — Manhattan — the median valuation error rate is 19.9%. In Brooklyn, it’s 12.9%. In Somerset County, Md., the rate is an astounding 42%. In some rural counties in California, error rates range as high as 26%. In San Francisco it’s 11.6%. With a median home value of $1,000,800 in San Francisco, according to Zillow estimates as of December, a median error rate at this level translates into a price disparity of $116,093.
Some real estate agents have done their own studies of accuracy levels of Zillow in their local markets.
Last July, Robert Earl, an agent with Choice Homes Team in the Charlottesville, Va., area, examined selling prices and Zestimates of all 21 homes sold that month in the nearby community of Lake Monticello. On 17 sales Zillow overestimated values, including two houses that sold for 61% below the Zestimate.
In Carlsbad, Calif., Jeff Dowler, an agent with Solutions Real Estate, did a similar analysis on sales in two ZIP Codes. He found that Zestimates came in below the selling price 70% of the time, with disparities ranging as high as $70,000. In 25% of the sales, Zestimates were higher than the contract price. In 95% of the cases, he said, “Zestimates were wrong. That does not inspire a lot of confidence, at least not for me.” In a second ZIP Code, Dowler found that 100% of Zestimates were inaccurate and that disparities were as large as $190,000.
So what do you do now that you’ve got the scoop on Zestimate accuracy? Most important, take Rascoff’s advice: Look at them as no more than starting points in pricing discussions with the real authorities on local real estate values — Experienced Agents and Appraisers.
Zestimates are hardly gospel — often far from it.
Call the Martin Real Estate Team of Lake Norman if you are interesting in Buying or Listing Your Home in the Cornelius, NC Real Estate area or other around Lake Norman…or even if you are looking for more information on Lake Norman Real Estate Values.
704-900-1619
Lake Norman homes
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Price: $7,995,000 (8360 sqft)
Subdivision: The Point
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Yates Realty Inc | MLS # 4210286 | Active

Price: $7,950,000 (10079 sqft)
Subdivision: The Point
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Ivester Jackson | MLS # 4217767 | Active

Price: $7,500,000 (6490 sqft)
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Grandfather Homes Inc. | MLS # 4137705 | Active

Price: $6,885,000 (1494 sqft)
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RE/MAX Executive | MLS # 4189074 | Active

Price: $6,250,000 (7788 sqft)
Subdivision: The Point
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Corcoran HM Properties | MLS # 4196147 | Active

Price: $5,995,000 (6601 sqft)
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Coldwell Banker Realty | MLS # 4212873 | Active

Price: $5,950,000 (6735 sqft)
Subdivision: Westview
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Ivester Jackson | MLS # 4147056 | Active

Price: $5,580,000 (4196 sqft)
Subdivision: Point Largo
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EXP Realty LLC | MLS # 4184600 | Active

Price: $5,500,000 (4214 sqft)
Subdivision: Point Largo
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Milemma Realty | MLS # 4192450 | Active

Price: $5,300,000 (5095 sqft)
Subdivision: Saylors Watch
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Ivester Jackson | MLS # 4209551 | Active

Price: $4,975,000 (4879 sqft)
Subdivision: The Cove
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Trump International | MLS # 4214572 | Active

Price: $4,690,000 (5236 sqft)
Subdivision: Wrights Emerald Cove
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Knox Group, The | MLS # 4218703 | Active

Price: $4,689,900 (5925 sqft)
Subdivision: Alexander Island
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The Agency - Charlotte | MLS # 4149633 | Active

Price: $4,500,000 (5102 sqft)
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Chosen Realty of NC | MLS # 4221786 | Active

Price: $4,140,000 (5982 sqft)
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Wilson Realty | MLS # 4150553 | Active

Price: $3,849,000 (6490 sqft)
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Magnolia Real Estate | MLS # 4206205 | Active

Price: $3,500,000 (1922 sqft)
Subdivision: Point Largo
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Milemma Realty | MLS # 4193767 | Active

Price: $3,500,000 (4340 sqft)
Subdivision: Mccrary Woods
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Legacy Carolina | MLS # 4145257 | Active

Price: $3,500,000 (2860 sqft)
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#1 Properties of Lake | MLS # 4193441 | Active

Price: $3,425,000 (4616 sqft)
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Wilson Realty | MLS # 4150567 | Active
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Lake Norman condos
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Price: $599,900 (1916 sqft)
Complex: St Philip Square
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Trelora Realty INC | MLS # 4172528 | Active

Price: $599,000 (3460 sqft)
Complex: Waterfront at Langtree
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RE/MAX Executive | MLS # 4171303 | Active

Price: $595,000 (987 sqft)
Complex: Portside
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Realty Dynamics Inc. | MLS # 4204017 | Active

Price: $585,000 (1128 sqft)
Complex: South Harbortowne
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Allen Tate Lake Norman | MLS # 4222403 | Active

Price: $579,900 (2164 sqft)
Complex: St Philip Square
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Milemma Realty | MLS # 4176759 | Active

Price: $575,000 (2634 sqft)
Complex: St Philip Square
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Helen Adams Realty | MLS # 4213054 | Active

Price: $575,000 (1057 sqft)
Complex: Portside At Davidson Landing
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Ivester Jackson | MLS # 4222963 | Active

Price: $556,500 (2250 sqft)
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Chosen Realty of NC | MLS # 4192908 | Active

Price: $545,000 (924 sqft)
Complex: Southpoint
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Lake Norman Realty, | MLS # 4195147 | Active

Price: $515,000 (923 sqft)
Complex: Southpoint
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Premier Sotheby's | MLS # 4201884 | Active

Price: $490,000 (1921 sqft)
Complex: Edinburgh Square
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Kidd Realty | MLS # 4221599 | Active

Price: $489,900 (2236 sqft)
Complex: 3 Cherry Way
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RE/MAX EXECUTIVE | MLS # 4220596 | Active

Price: $474,900 (1699 sqft)
Complex: Harborside Townhomes
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Chosen Realty of NC | MLS # 4206722 | Active

Price: $469,900 (1896 sqft)
Complex: Lake Norman Cove at Jetton
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Newport Properties | MLS # 4156164 | Active

Price: $435,000 (1777 sqft)
Complex: 3 Cherry Way
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Marc 1 Realty | MLS # 4214890 | Active

Price: $435,000 (2078 sqft)
Complex: 3 Cherry Way
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Allen Tate | MLS # 4220399 | Active

Price: $434,990 (2672 sqft)
Complex: Waterstone
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CCNC Realty Group LLC | MLS # 4208823 | Active

Price: $430,000 (1865 sqft)
Complex: Waterfront at Langtree
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Overcash Real Estate | MLS # 4189165 | Active

Price: $429,990 (2672 sqft)
Complex: Waterstone
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CCNC Realty Group LLC | MLS # 4201056 | Active

Price: $425,000 (1070 sqft)
Complex: Admirals Quarters
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O'Shaughnessy Realty | MLS # 4213289 | Active
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