Why Zestimates or other online valuation models can’t be trusted…
BY GEORGIE PITRON
If you’re like me, there’s a good chance you’ve come across your Zestimate, or another online valuation tool, telling you what the value of your home is. Wow! It’s worth this much?! Usually, that phrase has a good tone or a negative tone behind it. But, not so fast -- don’t get too hung up on that number. A Zestimate is only as accurate as the data behind it. They may or may not have accurate information behind them. Zillow uses an algorithm from states where a home’s sold price is required to be disclosed. Idaho is a non-disclosure state, meaning homeowners are not required to share what the home sold for. The sold price of a home is not public information, therefore is not accessible through automated valuation methods.
In many cases, a Zestimate is within 10% of the true market value, but on a $500,000 home that could mean a difference of $50,000.
This algorithm is not state-specific and is nationwide. Therefore, auto-populating a response based on whatever information it can scour from the internet. Automated valuation models also do not take into consideration renovations, improvements made, and the overall condition of the home. In many cases, a Zestimate is within 10% of the true market value, but on a $500,000 home that could mean a difference of $50,000. That’s a whole lot of money to be missed out on!
