Don’t check your home’s value without reading this first
Is my home's "Zestimate" accurate? If you have asked this question, you are not alone.
People throughout the United States have begun relying on “Zestimates” as the only source for getting their home’s current value. Sadly, as pointed out by the mainstream media below, this information can often be drastically wrong.
In fact, in California, the median error rate is 4.6%. This can raise some eyebrows when people enter their address for an automated home valuation.
LA Times mentions that in San Francisco, California the median home value is near $1,008,000. With “Zestimates” being inaccurate at a rate of 11.6%, this equates to about $117,000. This number alone should crush the expectation that computers are going to provide you with the most accurate answer out there for the valuation of your home.
According to the LA Times, Zillow’s very own CEO Spencer Rascoff stated that Zestimates are "a good starting point", but that nationwide "Zestimates" have a "median error rate" of about 8%.
Los Angeles Times:
US News Real Estate:
1. Basic Information Can be Inaccurate
User-inputted data does contribute to the "Zestimate". Information such as how many bedrooms/bathrooms make up the home, the square footage, and the lot size needs to be accurate! The more information Zillow already has about your home, the better. If it's a newer construction property or you have to add the property to Zillow, be CAREFUL!
2. Mistakes or Omissions in Sales Prices or Property Tax Records Can Happen
This is a BIG one. Property tax records are a part of the home valuation process that should not be overlooked. Just like inaccurate basic information, inaccurate date of sale or past sale prices affect your home's valuation. See the image below for an example.
Source: Seattle Bubble
3. Upgrades and Unique Features that are Unaccounted for
The bottom line is that Zillow will only know property details that have been added to its system. REPORT your home improvements or upgrades to the property. Something that may seem like a quick and easy fix to your home may affect the property value when you are ready to sell. There is a misconception that if you did update your kitchen or remodel the bathrooms doesn't necessarily mean it's worth $100,000 more than what Zillow says. The value of upgrades and additions to your home greatly depends on the average condition of other homes in your neighborhood.
Source: Homes Realty Group
4. Housing Turnover Rate
The turnover rate for the housing market is simple. The hotter the market, the more homes sell, which gives Zillow more data to help boost the accuracy of its Zestimates.
5. Major Changes to the Zillow Algorithm
If you are in the market to sell your home, the Zillow Algorithm is something you should pay attention to. Any adjustments to this can affect the value of your home, but Zillow doesn't adjust its algorithm very often. According to Investopedia.com, Zillow's algorithm was adjusted, and it brought the National average two points down from last year to a median error of 6%.
I live on the Westside of Los Angeles and specialize in selling homes in this area. Let me know if you would like me to do an analysis that shows exactly what your home is worth.
Technology is incredible, but the accuracy of your home's value is a huge deal since it's probably your largest financial asset.