“Zestimate”

“Zestimate”

by Steve Meyers

July 19th, 2014

“Opinion Piece Only”

I’ve been a little concerned by comments from Buyers and Sellers I’ve chatted with recently regarding their reliance on a new tool called the “Zestimate”. They seem to be putting more value in a number created by an algorithm then they are in their own personal judgment, or the opinion of professionals. As a consumer, you’re far more likely to come up with a far better guess of market value than a “Zestimate” by simply touring 6 similar homes in the market during the Sunday “Open Houses”.

However, I must commend Zillow on improving their algorithm based “Zestimates” of home values in the last three to four years. Four years ago, the actual Sales Price (market value) of homes was within twenty percent (20%) of the “Zestimates” about fifty percent (50%) of the time. Today, the Sales Price is within twenty percent (20%) of the “Zestimates” probably closer to seventy percent (70%) of the time. As a Buyer or Seller of residential real estate are your decisions based upon a tool like the “Zestimate” that is twenty percent (20%) to high or ….twenty percent (20%) to low? That’s quite a range.

Again, as a consumer of information, you should research the other tools available through your real estate agent that will provide you with much better information to make your decisions. An agent can provide you with a Comparable Market Analysis (CMA) or an Analysis of Assessed Values vs. Sales Prices of similar homes in your market.

A good real estate agent should be able to provide you with a range of Market Value within two percent (2%) to three percent (3%) of its’ likely Sales Price about ninety percent (90%) of the time. I contend that as a consumer making an important decision, having a professional provide a range of value of three percent (3%) that is ninety percent (90%) accurate, is better than making a decision with a tool that has a range of value of twenty percent (20%) that is seventy percent (70%) accurate.

Disclaimer: This is an “Opinion Piece Only”. To my knowledge, there is no empirical date that substantiates anything in this “Opinion”. Quite honestly, only your better real estate agents are skilled enough to provide you with quality estimates of market value within two percent (2%) of value with a high degree of accuracy.

If you have any comments or questions about this article, please email me at smeyers@kw.com. If you know of someone who would also like the information in this article, please forward it to them.

Steve Meyers is a Managing Broker at Keller Williams Realty in Seattle, Washington. He can be reached at (206) 972-3328 or smeyers@kw.com.

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