Zillow.com has a popular feature called Zestimates. It provides an estimate of market value for any home. Just type in an address and you will be provided with a few details on the home (based on tax records) and a Zestimate of fair market value. The question is, can you rely on that figure?
The answer is…..it depends! There are a few variables that will determine how reliable the Zestimate is for your home:
*Location: Large neighborhoods with very similar homes and an active sales market – Zestimates are typically reliable within 1-3%. Rural location with a wide variety of homes – Zestimates are likely to have a much greater margin of error.
*Style of home: Cape, Colonial, Ranch with simple floor plans – Zestimates are usually within 4-8% of market value. Custom built home, contemporary floor plan or a truly unique setting – Zestimate will likely be incorrect by as much as 10-40%.
*Maine vs Other States: We live in a uniquely beautiful state with a very diverse selection of properties. In other states, you may find much larger developments with similar homes or thousands of similar condos or house-a-miniums in gated communities which makes is much easier for Zillow to estimate fair market value. Not so easy for Maine! This is where your local Realtor brings a lot of value to the table.
A recent ARTICLE in the LA Times talks about the accuracy of Zillow’s Automated Property Value Estimates. According to Zillow’s CEO, the Zestimates are a good starting point but have an 8% average margin of error nationally.
We dug in a little deeper to see how accurate these Zestimates are in comparison to actual sales prices in Brunswick and Harpswell.
Based on Morton Real Estate sales over the past year:
Brunswick Sales: Zestimates in Brunswick were incorrect by an average of 12-18%. The lowest margin of error we saw was 1% to a high of 70%. The most accurate figures came in heavily populated neighborhoods with similar homes. Based on the average margin of error, a home worth $250,000 could show a Zestimate value $30,000-$45,000 higher or lower. A home worth $500,000 could be quoted a Zestimate $60,000-$90,000 higher or lower.
Harpswell Sales: Zestimates in Harpswell had an average of 17-26% error with a low of 5% to a high of 40%. If your home is worth $400,000, your Zestimate could be $68,000-$100,000 off and if your home is worth $800,000, your Zestimate could show a difference of $136,000-$200,000.
Bottom line is that property valuation is not a simple process that can be automated. It should not only take into account the simple measurements and floor plans, but also the intangibles and subtleties that make a property unique. It takes a knowledgeable and experienced professional to guide you through the art and science of setting a fair market price for your home. And ultimately, a property’s value is based on what a buyer is willing to pay for it!