The Truth Behind the Zillow Estimate

If you ever wondered about property values in your area, I am sure that you have spent your fair share of time on Zillow and similar third party websites researching your home or those of your neighbors.

Due to it's convenience, the internet has altered the way that many modern day buyers shop for homes. In recent years, online websites are the most consulted information channels for home purchases in the United States with 89% of the respondents consulted websites, 87% consulted real estate agents and a yard sign was the choice for 51% of the respondents.

As of May 2018, data shows that Zillow Group Inc. operates the most popular real estate website, with a monthly average of 36 million unique visitors and a 27.2% of the market share based on website visits. Zillow's grasp is even greater due to it's acquisition of Trulia, which ranks as the second most-frequently visited site, with 23 million unique visitors per month. As the owner of the two leading sites for online home shopping, Zillow Group is consulted by approximately 59 million unique visitors per month.

Zillow's most commonly mentioned feature amongst buyers and sellers is its Zestimate® - an estimated market value calculated by a proprietary formula, based on public and user-submitted data. Although Zillow is clear that is not an official appraisal and should be used as a starting point in determining a home's value it is not heavily advertised. Although Zillow encourages buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as: getting a comparative market analysis (CMA) from a real estate agent, getting an appraisal from a professional appraiser and visiting the house (whenever possible). Many fail to follow through with the suggested steps or dig deeper into the valuation provided, especially if the value shown is a favorable one to their expectations or even exceeds them. This is often the main issue with not fully understanding the calculation and one that can lead to a disappointing outcome if it is used as a sole source in pricing a home to market.

🎯 Zillow's Accuracy

The Zestimate® accuracy depends on location and availability of data in an area. Some counties have deeply detailed information on homes such as number of bedrooms, bathrooms and square footage and others do not. The more data available, the more accurate the Zestimate value. Since the data can be altered by homeowners themselves and user-submitted it creates a larger room for error as it is not verified and taken as is in order to calculate local property values.

📊 Data Coverage and Zestimate Accuracy

Zillow provides a Data Coverage and Zestimate Accuracy Table on the National, Town/County and Top Metro Area level and available for all it's visitors to research. Refer to the table below which will show you the accuracy of the Zestimate® for all counties in New Jersey as well as the percentage of error in pricing and accuracy estimates based on the data available for each:

Source: Zillow Group

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