Question: How accurate is the Zillow Estimate? Zillow introduced a now popular feature on its website of house estimates. How accurate are Zestimates? Can they be relied upon?
Answer: They are somewhat accurate and should not be relied upon.
The zestimate is an AVM, an “Automated Valuation Model” which means that a computer algorithm computes a home value based primarily on county tax roll data. The end result isn’t bad for a process that doesn’t include a human and can be good for determining what a property might be worth. I recommend you don’t rely on the Zestimate. The key word is ‘rely’, as in making decisions based upon the Zestimate. The Zestimate is too unreliable to decide what an owner’s house should list for, or sell for. It is also unreliable for the buyer in determining an offer amount or an acceptable purchase price. According to the Realtor Property Resource, the AVM’s are on average within 20% of the true market value 50% percent of the time. It is not found to be very accurate in this area.
Is there a better alternative for getting a good price on a Realtor Valuation Model? I recommend asking a Realtor for a RVM. The Realtor Valuation Model is more accurate because it includes county tax data, historical and current MLS data, and professional opinions of real estate experts. Realtor’s Property Resource has found on average the RVM within 10% of the market value 90% of the time. That is the accuracy you want when making decisions and can be produced quickly from a professional Realtor.