Accuracy of Zillow Zestimates
Zillow is a favorite website for consumers searching for homes to buy or sell.
Most buyers are looking on Zillow to see what homes are available for sale in their area & price range.
If buyers are interested in a particular home, they do not make their offer based upon Zillow’s Zestimate. Like most buyers they are looking to get a good “deal”. The majority of the time, buyers offer less than the seller’s listing price. If a home is priced right, the offer will be anywhere from 3 to 5% off the list price. Than both buyer & seller will negotiate the sales price from there.
However, the majority of Zillow’s Zestimates are over-valued which creates this higher, false value & makes it difficult for agents to convince seller’s that the Zestimate on their home is inaccurate based on comparable market analysis (CMA) which includes comparable sells within the last 6 months, acting listings, and listings pending sale in escrow, within a 1 mile radius of the subject property.
Most sellers will list their home with the agent that promises them the most (Higher list price). Zillow wants consumers in the real estate market to visit & like their website so it is in Zillow’s best interest to have a higher Zestimate as opposed to a lower Zestimate. Everyone likes to see that someone thinks their home is worth more, than what they thought.
Very seldom does a home sell for the Zestimate.
So what happens is agent’s take an over priced listing based upon the Zestimate & the house sits on the market until there is a price deduction that accurately reflects the current conditions on the market .
Some sellers are determined to get their Zestimate price which the majority of the time is much higher than the home is worth.
Zillow even states in a disclaimer, “The Zestimate is Zillow’s best estimate of a home’s value. It is based on a blend of valuation methods, each of which may produce a different estimate depending on the available data.”
Even that explanation of Zestimate, does not seem very accurate.