Those sights are just one of many tools the general public have access to which aids them in looking at how different neighborhoods are valued.
All the best to you.
Here is a post that explains the process and accuracy in detail:
Zestimates: Zany, Zesty Z-Evaluations With Zero Z-Value
I tell my clients they are high 49% of the time and low 49% of the time which means 1 time in 100 they are right. Zillow has data regarding their accuracy and realize they are only a starting place. At the bottom of the page they will tell you how close they are in the area you are looking at.
Nothing compares to a human being who sees the houses inside & out. Realtors and Appraisers will render value opinions based on research, but the final judgment comes from putting a home on the market and finding out what a willing buyer and willing seller can agree to.
This is an excellent question and the sad truth is that Automated Valuation Models (AVM's) are very clever high-tech nonsense. These systems are extremely large and complex, and creating such presentations is a marvel of data collection, computer programming, and website development. But there is a huge difference between being novel and interesting, and actually being useful and accurate. On their website, Zillow charts the accuracy of their Zestimates - someone earlier said they claim to be within 20% of the actual sales price. Actually it's not that good, as the statistics state that they are +/- 20% only 78% of the time. Compare this with the fact that more than 95% of homes are now selling within +/- 3% of list price in Santa Clara Co.
I check Zillow before and after I get an appraisal on every transaction and I have to admit that as long as the property is not unique by definition, and as long as there are sufficient comps, the values often come in within an acceptable margin of error and are in line with the appraised value.
It IS very important to keep in mind that any two appraisers might have very different opinions of value as well --- so it's not just the fault of any computer algorithm.
So to answer your questions, I would say: Quite accurate and "yes" an indicator of the actual price.
Let me know if I can help you further.
As the others have already mentioned, Zillow, Trulia, eppraisal and other sites use their own custom mathematical algorithms to determine price values based on listing, pending and sold prices of surrounding homes within specific geographic locations. When you consider the enormity of this job and the sheer number of homes sold in the United States, any website that can generate estimates that are even "close" to the actual price--well, that's pretty amazing.
Unfortunately, some of the most important factors in "pricing" a home--school district, configuration, location, interior condition--are not considered in these mathematical equations, so much so that even Zillow admitted recently their estimates can be as much as 20 percent off the price for a home.
Truth is, the only way for you to really determine price is to pay for an appraisal to obtain a value.
Otherwise, as mentioned in the past by many of us here on Trulia, the amount of money a home is worth is based solely on what the buyer is willing to pay and the seller is mutually willing to accept. Most importantly, Hironmoy, your best answers and those tailored to your specific needs and to any home to which you are considering will come from your own agent--hopefully, someone who is local in the area and understands the intricacies of pricing homes here.
Grace Morioka, SRES
Area Pro Realty
The flip side of the coin indicates that the Zestimates although can be a good reflection of the current value may also not be accurate at all. The Zillow property values numbers appear to be driven by the subject properties proximity to the comparison homes. Their theory is the closer the comparisons are to the subject the better the accuracy.
This unfortunately, in not always the case. Adjacent communities can be as different as night and day and should not be used as comparisons. A trailor park located next to $500,000 homes should not be considered valid comps.
The fact of the matter is that it's impossible for accurate value numbers to be generated from a distance. If this were acceptable it would seem that most appraisals would be done similarly.
In short, the information could be good or it could be misleading causing people using this as a resource to exercise great caution.
I hope you find this helpful.
You have posted 17 questions in the last week. We all hope you are gaining valuable insight into the market. Hopefully, you are also learning that it might be helpful to you to select a Realtor to partner with who understands the market as they study and work in it every day.
All the best,
April Tavares, GRI, ASP
RealtorÂ®, DRE License #01742179
On the web: http://www.AprilTavares.com
Free Santa Clara County Market Trend Reports: http://april.rereport.com
Even two years ago, Shortsales and REO's were a small part of the picture. A lot of professionals would not count those when they were computing Averages.
Lately, those two types have comprised as much as 80% of the sales in some areas.
So, when we look at Mean, Median and Average; we ask the question, "What was the condition?" since almost all of those REO's and many of those S.S. are in "fixer" condition.
This is one of the reasons why you need an Agent to help you investigate and analyze.
They don't factor other pertinent information or the nuances of location. One street separating two properties can make a HUGE difference in actual and perceived market value.
Either rely on a realtor to give you a CMA (comparable market analysis) or count on your appraiser to give you the value which is what your bank will use when analyzing how much to loan you to buy it.