Almost 100% of this Main Line Real Estate Agent’s clients admit to using Zillow. If not exclusively, then occasionally. Many sellers start there to get an idea of the price their home might fetch on a sale. And many buyers use its search feature to check for new listings. Like the best of the public websites that provide listing information, Zillow gets its data directly from public websites as well as the MLS system that agents use and pay for, but often the specific information they choose to disseminate to their viewers is not up to date or as precise. And their valuations are often way off.
Let’s look at the Zestimate feature. These estimates of value are based on various pieces of data as well as algorithms. An internet algorithm has absolutely no concept of the condition of the home or what updates have been completed recently.
Zillow has been the subject of a few lawsuits over its valuation system. One was a class-action lawsuit, filed in 2017 by Chicago homeowners who claimed it misled homebuyers by providing them with very low figures. The plaintiffs claimed users treated Zestimates like appraisals. According to a report by Market Watch, Zillow, said its Zestimates were not appraisals. Instead, it called them a reference point where users can start their search for home values.
If you click on the question mark next to the Zestimate which breaks down the accuracy of the Zestimate, in some areas, the Zestimate margin of error is more than 10%.
A 2018 Forbes article found that Zillow’s estimates, which are usually given as an exact number, should be based on more of a range, but even then, it’s not always accurate. There’s a 50% chance it could sell in that range, but a 50% chance it could not.
In January 2019, Zillow announced it awarded a $1 million contract to a team of data scientists and engineers to help improve the accuracy of the site's Zestimates. The team leveraged different factors affecting a home's value including public data, commute times, road noise, and other information to factor into its algorithm. Zillow estimated the nationwide error rate would drop below 4%.
Zillow is here to stay and many folks love using it. But it is no substitute for an experienced agent using the most up-to-date information.
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