Being in real estate for 15 plus years now, we get asked multiple times a week if Zillow Estimates or Zestimates are accurate values for home values in Texas. The short answer? NO.
Ok, well let’s be more specific – it depends, and most of the time, no it is not accurate. Instead of giving you a one word answer, NO. Take a look at this neighborhood where I just pulled a CMA (Comparative Market Analysis).
These are actual homes in a neighborhood in Dallas that sold in 2016 and you can see the 2016 Zestimate value next to the sales price. The closest percentage is -4.3% of the sales price. In one instance the Zestimate was 28% high and another instance a few blocks away it was 24% low. That’s a 52% spread on values in the same neighborhood, on two homes that sold within 11 days of each other. HOLY COW.
Why is Zillow so inaccurate in Texas? Well there is one big explanation for this, we in Texas are a non-disclosure state. What that means is that unless you are a Realtor in the State of Texas, the sales prices are not publicly disclosed online or in paper for when homes sell. Additionally, the taxing authorities don’t even get actual sales prices recorded with the county. Instead, the loan amounts/notes of the mortgages are recorded, but the actual Closing Disclosures (CD’s), formerly known as HUD’s, don’t get recorded with the county.
So to put it simply, no one but the private backend of MLS actually has sold values for Texas. Not Realtor.com, not Zillow, not Homes.com, not even the major brokerage websites can report actual sold data. They all go off of what the list price was when the home went under contract, not what the sales price actually was when it closed out.
This can make a huge difference when you are experiencing a For Sale By Owner that uses Zillow or a Buyer/Seller that uses Zillow or any other national real estate website other than MLS sales data to “determine” what a home is worth. If you use the metrics above, the closest you would have gotten to the actual value of the home if you were making offers on any of the homes above would have been $22,203 off. I don’t know about you, but that could pay for a lot of furniture or other things in a home instead.
When making offers on a home or determining your list price of a home going up for sale, make sure you use actual “SOLD” data from MLS on your home.