Are Zillow Home Value Estimates Accurate?

​​I'm asked this question often, "Are Zillow home value estimates accurate?"  It depends.  On what?   ​Below are some of the questions I would consider when determining if Zillow home value estimate is accurate.  If you're considering selling your home and you would like a free home value estimate, please call me at (800) 477-0075 x 4 or complete this online home value estimate request form, click here.  Thank you! - Kevin Nakano

1. Current season and overall direction of the market in your neighborhood?
2. Size of your home as compared to comparable sales?
3. Location, configuration and size of your lot as compared to comparable sales?
4. ​Condition of your home and finishes in your home as compared to comparable sales?
5. Amenities of your home as compared to comparable sales?
6. Your specific needs (time frame, budget, requirements for sale, etc.).
7. Your chosen selling strategy.
8. Advertising plan.
9. Best practices to minimize buyer fall out.
10. And many other factors...

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​All of these factors will impact whether your home sells for more or less than Zillow's estimated home value.  I've seen situations where Zillow's home value estimates were way off.  Why?  I assume that Zillow's automated algorithms are not able to quantify and  incorporate all of the factors above.  I assume that Zillow probably uses average gross price per square foot of comparable sales to determine a specific home's value.  

For example, I helped a client sell the home below.  Zillow's estimate of home value was $291,825, see screen shot below.  When I reviewed comparable sales through the multiple listing service (MLS), the average gross price per square foot was $198.  If you multiply this number by size of the home of 1,593 sf, then the home's estimated value based on average gross price per square foot would be around $315,000, which is around 8% off from the Zillow home value estimate, hence my assumption that Zillow uses average gross price per square foot in their algorithm to determine home values.  

Many people and agents mistakenly use average gross price per square foot from comparable sales to estimate a home's value.  It's important to know that appraisal value is not determined by average gross price per square foot.  Why is it important to consider what the home will appraise for?  Because appraisal values are what enable buyers to obtain financing to purchase their  homes.  So, if your home could possibly appraise for a higher price than a price determined by average gross price per square foot, then you may be leaving money on the table.

Ultimately I was able to sell my clients home above for $392,000 (around $100k more than the Zillow estimate) because of my analysis of the factors mentioned above.  So, it is always a good idea to meet with an experienced and knowledgeable Realtor in person at your home when you're seriously considering selling your home.  

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