Many of our clients refer to the "Zestimate" referring to value for their home. Many times it confuses the seller ( and sometimes the buyer ) since Zillow has become a good source for consumers of real estate. The below article is a good example of how inaccurate it can be - even for the CEO of Zillow.
Spencer Rascoff, CEO of Zillow recently sold his home for way less than the current Zestimate. In July, Rascoff's Zestimate was 7.3% higher than its listing price of $1.295 million at the time. Over the course of time the property was listed from July of 2015 to when it sold in February of 2016, the property had several price reductions. Ultimately the home ended up selling for $1.05 million, which was 19% below its July listing price. On March 1st, the day after the property sold, the home's Zestimate was $1,750, 405. If the Zestimate were accurate, then the CEO of Zillow would have sold his home for 40% less than what it was worth.
Zestimate's national median error rate is 7.9%, therefore half of Zestimate's nationwide are within 7.9% of a home's sales price and more than 7.9% are off by half.
So what are the reason's why Zestimate's are often so far off?
Zillow doesn't have access to sold listings data that is from the MLS (Multiple Listing Service). In Rascoff's case there wasn't any recently sold data in the Seattle area from the MLS used to create his Zestimate. Zillow uses public sales records which are not as accurate as automated valuation models or AVM's that crunch sold MLS data. Zestimates also do not take into account "non quantifiable facts." Non quantifiable facts could be things like layout design or lighting. When referring the values of luxury homes, the value is affected much more than on less expensive properties.
According to Zillow, Zestimates are just estimates and should not be used for pricing a home, "A Zestimate should simply be used as a starting point only.
With the recent sale of Rascoff's home and the gap between the Zestimate and the sales price, it should make it easier for real estate agents to seize the opportunity.
Want to know the true value of your home? Contact Blake Morar today for more information.