Zillow home values-are they accurate?

Many times, people will use Zillow to determine the value of their home. I’ve studies home values and home trends for almost ten years now. When Zillow first came out, I regularly compared my appraisal value to Zillow home values. I’ve compared two case studies to give you an idea when Zillow may be okay to use and when you shouldn’t use Zillow. In both cases, you should always review the comparable sales and select the most recent, comparable sales to your home. It might even be a good idea to drive by the comparable sales used by Zillow.

Case study 1:This home was a typical home in the development. The subject was located within the city core with plenty of comparable sales. The home was a two story home with no basement. In this market area, basements are not common. Comparable sales were easy to locate. There were a couple of recent sales in the same development that offered similar homes. The rest of the home in the development offered homes supporting differing design and appeal. Outside the development, but within a half a mile or so, there where other sales that offered two story homes with similar design and similar lot size, quality, etc.

I completed the appraisal. Just for curiosity, I typed in the address of the subject and compared the results to Zillow. The Zillow estimate was surprisingly accurate. I was amazed and worried of my job security. How could a computer generated model be so accurate? And then I completed a few more appraisals and compared them to Zillow home values.

Case study 2: This home was on the outskirts of town. The subject was an older home located on development property. After I completed the appraisal, I looked on Zillow to see what this computer would have to say. Could it be similar to the home value of my last case study? Wow. This time, the Zillow computer was so off in value, I had thought that the computer was broke. After looking at the comparable sales, here is what I found.

The main characteristic of the subject is that the home was an older home located on a larger lot size. Comparable sales where limited in the area that offered both older homes and similar lot sizes. The Zillow computer selected homes within close proximity to the subject, but the comparable selection was not even close to comparable.

In summary, is Zillow accurate when determining the value of your home? The answer is sometimes. If the subject is in the city and there are similar comparable sales, there is a higher probability that Zillow is accurate. If your home offers unique design, if the comparable sales are limited, if your home offer development potential, if your home offers inferior quality or anything other than average, there is a high probability that the value will be incorrect.