There are 4 methods to value a property in Real Estate. The 4th or Multiple Regression Analysis is probably most similar to what zestimate does. It essentially is a statistical method for spitting out a price based on several factors, once enough data points are obtained. But frankly what zestimate does is oversimplify this process and the more they do that, the less accurate it is.
When an appraiser uses this method (or an economist) there are literally over 100 inputs. Zestimate doesn't have anything close to this, they might have 2-3 dozen at best (based on a very thorough assessor's data) and this too is likely to be quite outdated. Think about how long it takes the assessor to figure out that you put new vinyl siding on your house, or added some skylights, etc.
The point is, that to do something like this is very complex and sure a computer program can (and is required) to do it. But this only really works if they have those 100+ data points. Everything from the type of moldings and floor coverings to a time dating variable (to account for inflation, appreciation, depreciation, etc. in a given market) are considered. How could zestimate possibly do this?? They cannot.
So ultimately what you have is a "zestimate", just that something close, maybe within 10% of the price. And frankly that's about as accurate as what your neighbor Bob, or your cousin Sherrie could tell you.
If you want a good value, call a couple REALTORS, they'll typically do a comparative market analysis for free and I think this is generally a better method, at least on residential real estate.
Broker, CRS, GRI, ePro
Raving Real Estate
Knowing the average prices in a neighborhood might be interesting for some reason but it never even gives a rough guide as to what a house is worth. You don't really buy a house based on the square footage...or maybe I shoudl say instead...it would be foolish to buy a house based on square footage.
If you are looking to buy or sell, you should be working with an experienced agent who can provide all that information to you, in the best format for you.
The "Eckler Team"
Century 21 Almar & Associates
Venice, Fl 34285
I good Realtor can give you a CMA (Competitive Market Analysis) or pay the price and have an appraiser do a complete work up on your home - a local Realtor that really knows whats happening in the area will always be more accurate than those web sites!
Bill Wootan - Team Leader
Team One @ Century21 H T Brown
I just purchased a home 4 months ago for $210,000, which was also the appraised value. The home had a Zestimate of $189,000 prior to my purchase. The Zestimate on my home is now $226,000. It also stated that the homes would increase in value by 2.5% per year and still makes that statement. That would mean if Zestimate is even close to accurate, my home is increasing at a rate of 59% per year based on the old value and 23% per year based on the appraised value.
Not to be trusted at all.
The most recent two increases were 2.5% and 2.4%.
I live in a small county seat town in a predominantly rural area (county population 50,000, town population 5000) and property prices reflect the fact that it's more than a wide spot in the road - but only just.
Although I realize that at least one property in my neighborhood has been sold within the last month or two, property sales are generally at a stop. The property sold for over $20,000 less than the Zillow estimate for my house - which is right next door. The Zestimate for my house is almost twice what I paid for it - less than five years ago. Hmmmm. I don't think so.
So, although the naive ones among us might get some feelgood, Zestimates to me are synonymous with hokey bullcrap.
No one truly knows what a house for sell for in this real estate market. Realtors can give opinions, Zillow can give you an opinion, your neighbor can give their opinion. The comps from a few months ago are not even accurate. Sellers and buyers need to be very flexible right now. Buyers really decide the right price for a property. Everything else is an educated guess. A home seller or realtor can update a listing in Zillow to more accurately reflect their particular home. If the house has not been updated in Zillow it usually is not very accurate. Last week I updated my listing at 18909 Lark Song Terrace in Germantown. Zillow had it listed as a single family home, it is a townhome. That made all the data on that street innacurate. I would be happy to speak with you about Zillow or any other questions you might have. Please feel free to call (240-997-8654)or e-mail (firstname.lastname@example.org) me with any other questions you might have. Have a wondful day!