Zillow’s Zestimate has become a household name. But, as it turns out, the feature could end up costing you tens of thousands of dollars.
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Many people have made the mistake of using a Zillow Zestimate as an appraisal. The problem is, Zestimates are often inaccurate.
A woman in Glenview, for example, learned this from experience when a Zestimate valued her home at an $80,000 less from what she and her real estate agent believed was its true worth.
Because of this, she struggled to get her house off of the market and is now suing Zillow. If there is a large disparity in a home’s true value and its Zestimate, buyers will be hesitant to make sufficient offers, or to make offers at all.
This isn’t to say that Zillow is without any positive attributes, though. One feature I’m personally a fan of is their mortage calculator, which allows you to not only work with principal and interest but also allows you to enter taxes and insurance. This lets you work with all the data given to find out what sort of loan might be right for a given client.
A study has shown that the Zestimate is always off by an estimate of about 5%.
As I mentioned earlier, my second grievance with Zillow is the Zestimate. A study has shown that the Zestimate is always off by an estimate of about 5%—which can make a big difference, especially for higher-priced listings.
Because of this, Zillow went so far as to hold a contest offering $1 million to anyone able to correct their Zestimate algorithm.
Their defense against the lawsuit they’re facing, in fact, is by admitting that the Zestimate isn’t even an appraisal. Be that as it may, the lawsuit came about because the Glenview woman I mentioned earlier experienced a direct and negative influence on the prospects of her home because of the Zestimate.
As sticky a situation as this all is, the lesson I think comes from it is that you should be skeptical of Zestimates and, most importantly, should talk to a real estate professional about the value of your home.
If you’re thinking about the value of your home, the home you’d like to buy, or if you have any other questions for me, feel free to call or email me. I look forward to hearing from you.
