Ever look up your home's value on Zillow? Many of us have, whether the goal is refinancing, selling, or to feed our curious nature.
Companies across the internet know this, too. Type “home value estimate” or “home valuation” into Google and you’re greeted with a plethora of tools, all claiming to deliver an estimate of your home’s value based on their proprietary tech.
One estimate we are consistently asked about is Zillow’s Zestimate. Launched in 2011, Zestimates were quickly accepted by the public as a quick way of knowing what virtually any home was worth.
Or, what they’re estimated to be worth.
The challenge with Zestimates, and the wide majority of home valuation tools, is their accuracy — or lack thereof. Zillow relies on third-party sources for its home sales data, which can cause lags, incomplete reporting, or nonexistent reporting.
Furthermore, here in Texas, we are a non-disclosure state. This means that the actual sale price of a home is not required to be publicly disclosed. Loan amounts/notes of mortgages are recorded, yet the actual sold data is reserved for those with MLS access, which most home valuation tools do not have.
When it comes to our home, any estimate of value is going to create some level of expectation. When that value is inaccurate or misleading, it creates the opportunity to be let down or leave money on the table.
This is not to say that Zillow is purposely misleading homeowners. They do a great job of publishing data on the accuracy of their Zestimates, as well as how many homes in a particular area have them. You can find that data HERE.
Let’s do some quick number crunching based on their accuracy metrics for Texas:
In the state of Texas, Zillow’s median error rate is 1.9% for active listings. For homes that are not on the market, that error rate jumps to 5.7%. This means that half of Zestimates for off-market properties in Texas are within 5.7% of the actual selling price, while the other half are not. At the median off-market rate, if you live in a $500,000 house, that’s a $28,500 margin of error. If you’re on the wrong side of the bell curve, it could be much more.
The reality is, a Zestimate, or any home valuation tool for that matter, is great to have when conducting some cursory research on the value of your home. When the time comes to get an accurate estimate of your home’s value, having your Realtor run a Comparative Market Analysis (CMA) that leverages recently sold data is the way to go.
If you’d like a complimentary CMA, simply head to https://vanpooleproperties.com/home-valuation/, share some info on your home, and one of our expert agents will be happy to run a proper analysis.