How Accurate is Zillow Really?
How Accurate is Zillow Really?
Zillow has been an invaluable tool for me. The site provides up-to-date, informative, and interesting data on the full lifecycle of owning and living in a home. From time to time, I also advertise on Zillow. The feature that usually generates unusual interest is the Zestimate®, or the estimate of home values. Sellers regularly comment how delightful Zillow is, most especially when their home is given a high value. However, if the Zestimate® seems low, one could hear the opposite. So how accurate are Zillow’s estimates anyway?
I made careful observation of the most recent 50 sales of single family homes in Pleasanton in 4 price segments. It covers sales made from early to 2014 up to the present. Comparing the actual sold prices to the estimated value from Zillow, I found out that the results are very interesting.
Here are some observations:
1. Zillow tends to be less accurate if the price range involved is higher. This fact though isn’t surprising as there are more noticeable differences in larger, more expensive homes than there are in modest (by Pleasanton standards, not by the standards of the rest of the country who thinks we are all crazy for paying $900,000 for a 1700 sq ft house, but I digress).
2. For Pleasanton homes for sale between $500k – $1.0 Million, Zillow’s estimate missed the mark by 5% or more 38% of the time. As the price ranged increased, the percentage also increased. And for homes over $2 million, Zillow’s estimate showed more than 5% difference 86% of the time.
3. For lower end homes, Zillow’s estimate was off by more than 20% from the actual sales price 4% and 0% of the time. The difference jumps to 16% and 36% for the higher priced homes ($1.5 – $2 million and $2 million +).
4. For homes under $1,500,000, Zillow’s estimate consistently came in below the actual sales price and a significant percentage of the time came in higher than the actual sales price above $1,500,000 (66% for homes between $1.5 – $2 Million, and a whopping 96% of the time for homes over $2 million). This can be attributed to how hot the market was in these price brackets. Usually, homes with lower price get multiple offers and overbids while homes with higher price stay in the market longer and get a more balanced market.
It is understandable that creating an algorithm to estimate value is an immense and intricate endeavor. As such, Zillow will always meet challenges when it comes to putting values in the higher price ranges because it is impossible to put subjective value components into those homes. There are things that are impossible to quantify in any meaningful way. These may include upgrades, views, privacy, floor plan, flow, room count, etc. But I am confident that they will keep on trying and improving. And we will certainly keep watching. If you want to have a more accurate notion of your home’s worth, call me, or any knowledgeable top real estate agent in Pleasanton CA.
Note: Statistics obtained from the Bay East MLS and Cloud CMA. Information is believed to be accurate but not guaranteed.
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