The article attached at the end of this post, prompted our research!
When Zillow.com launched its website in 2005, the general consumer became frenzied over their Zestimate function. Now all home sellers and homebuyers could have home “market values” at their fingertips. All you had to do was type in your own home address, or that of your friends/foes house to see what they paid.
Their site allowed both buyers and sellers to have information on the market, whole neighborhoods or individual homes that once was exclusive to real estate agents and appraisers.
Zillow allowed the public to become more informed by understanding comparables, knowing what houses sold for and days on market. But that’s where the benefits ended.
The Zestimates are not accurate and should not be relied upon! This is from Zillow’s own site:
Zillow Accuracy : The Zestimate’s accuracy depends on location and availability of data in an area. Some counties have deeply detailed information on homes such as the number of bedrooms, bathrooms and square footage and others do not. The more data available, the more accurate the Zestimate value.
Data Coverage and Zestimate Accuracy : Zillow's accuracy has a median error rate of 4.6%. This means half of the home values in the area are closer than the error percentage. For example, in Seattle, Zestimate values for half of the homes are within 4.5% of the selling price, and half are off by more than 4.5%.
From our own research on their site, the problem is with their comparables……. yep their strength is their shortcoming. Search any property address on Zillow, look at the Zestimate then scroll down and see the similar properties…. what do you see? Un-similar properties!! They are pulling properties in a certain radius to the address you entered, but they are pulling ALL properties—townhomes, 100-year-old homes and even condos that sold nearby. These are NOT comparables and will give skewed numbers!
The following article is a good read that addresses the problem with Zestimates:
http://www.chicagobusiness.com/realestate/20170522/CRED0701/170529993/class-action-suit-aims-to-halt-zestimates-in-illinois
