Zillow’s Typical Error is $17,860

Here’s the problem. You have a home for sale and Zillow’s Zestimate for the house is way too low. To make matters worse, Zillow puts their (low) estimate of your home’s value right below your list price so everyone that looks at your house on Zillow thinks it’s way overpriced.

You wonder if your home hasn’t sold because of that low Zestimate or if it explains the low ball offer you got.

Low vs. High Zestimates

Low Zestimates can certainly complicate things for home sellers but, counterintuitively, high Zestimates can be even more damaging to home sellers, that is, if the sellers actually believe those high Zestimates.

​Where home sellers with low Zestimates will tend to immediately dismiss them as inaccurate, home sellers with high Zestimates will tend to immediately anchor on the high estimate and think it’s accurate, holy and just. 

​When the Zestimate is high there’s this natural emotional response – home sellers tend to fall in love with the (high) estimated value, they tend to get starry eyed and start imagining what they would do with that money, and ultimately they tend to overprice their homes. Overpricing is very expensive to home sellers but that’s a post for another day.

Few people, however, think having a high estimate is a problem and then go searching on Google to find out why their Zestimate was so high. Most people accept high estimates as gospel. 

If you’re reading this, you probably have a low Zestimate. 

When people get low Zestimates, they start to search Google. Top 20 search terms with “zestimate” include; “zestimate accurate,” “is zestimate accurate,” and “zestimate accuracy.” A lot of people want to know how accurate Zillow Zestimates are and I bet the vast majority of them are victims of low estimates from Zillow. 

Visualize the inaccuracy. 

As a former economist, I’m going to visually explain to you how accurate/inaccurate Zestimates are. If more people understood the true level of inaccuracy of Zillow Zestimates, the damage to home sellers and buyers would be lessened. That’s my goal, anyway.

I know I can at least help you – the reader – to better understand the accuracy of Zillow Zestimates and I believe that will help you when dealing with home buyers and sellers that throw Zestimates in your face.

I’m afraid, however, that I’m not going to be able to stop home sellers from falling in love with high Zestimates and I’m not going to be able to stop some home buyers from feeling fear about offering fair market value for homes with low Zestimates.

Click here for the full article by John Wake from his Real Estate Decoded blog.