How Accurate Are Zillow and Zestimates With Real Estate

Well, it happened again. I have to write about how accurate are Zillow and Zestimates with real estate. I visited with a friend and client in their home, and they were curious. They knew that the Costa Mesa real estate market had gone up a bit in the past few years, but they were curious. How much? How much do you think my home would be worth right now if I was to sell it?

 

 

My friend lives in Mesa Verde, in the Balearic neighborhood. She went to Zillow to review her zestimate for her home. If you are not familiar with those, Zillow is a leading online real estate advertiser who uses a “proprietary” estimate for homes which they call an “estimate”. I know Zillow is in the process of changing their system, but Zestimates have largely been inaccurate. Their algorithm does not adjust quickly enough to how the market changes.

 

My friend’s home’s Zestimate was $791,003 on a 2300 square foot home on a good street. Her condition is good – not great, and not amazing, so it should fit in well with a general zestimate. That was the good news. The bad news is that her zestimate was off. And by a lot. Her true value on the market right now should be closer to $950,000. I think that’s significant, don’t you?

 

So what is the problem with this? The estimate is way off. And I have ranted about this before. But what if a home seller was going to sell their home? What if they thought Zillow’s estimate was close to accurate, then they called a Realtor? Now what if an undereducated Realtor told my friend her house was worth $850,000? She would be happy, because it is $60k more than Zillow said, right? Now she goes to sell, puts the home on the market, and gets multiple offers. And she is really happy. She sells quickly and moves on.

 

But you say, no, Colin, that would never happen. Let me tell you something – I saw this happen a bunch of times last year, in a great real estate market for sellers. Perhaps those sellers did not rely on a zestimate, but it is common for a seller to only contact one Realtor to sell a home, without getting an opinion from another agent.

 

You can see in this example that if my friend took that path, she could have left $100,000 on the table. And yes, I saw that happen last year here in Costa Mesa.

 

Zillow even says they have errors in their estimation process. They say the local LA market as of this writing is off more than 6%. That 6% on a million-dollar home is $60,000 – I would say they are off more than that from what I have seen.

 

Moral of the story? Use Zillow if you are curious, but if you want to know what your home is worth, call a local Realtor, one who knows Costa Mesa real estate inside out and can get you a true value for your home.

 

Colin Delaney is a local Broker/Owner of GateHouse Properties based in Costa Mesa and has been working closely in the Costa Mesa market for more than 13 years. Connect with Colin at (714) 743-9882 by cell, or email, and feel free to ask him for the true value of your home 🙂