3OYS Investigates: How accurate is Zillow?Posted: Updated:
PHOENIX -- Chris Jackson is a certified residential appraiser who's been placing values on homes for nearly 15 years. "If you want to be accurate, the only way to be accurate is to get an appraisal," Jackson tell 3 On Your Side.
But, if you can't afford an appraisal and you're just curious about how much your home may be worth, you might have turned to the popular website called Zillow.com. Punch in any address in any city, and Zillow gives you what's called a "Zestimate," which is basically a rough estimate of what your home may be worth.
Dean Wegner says he's very familiar with Zesimates.
"I mean it rhymes with estimate. It's called a Zestimate and that's what sticks. And that's what my house is worth," Wegner jokes. At least, that's what most homeowners think anyway.
Wegner is a Scottsdale mortgage specialist who's been in real estate for more than 20 years. He says Zillow is one of the most popular real estate websites around.
"When it first came out, the real-estate community hated, I mean they just hated Zillow because sellers would show up to the table and say 'This is what my house is worth!' So Realtors just fought it."
But how accurate is Zillow? Is your home really worth what it says? Well, for the Phoenix area, Zillow gives itself three stars out of four for accuracy. Not bad.
But 3 On Your Side wanted to put the website to the test, so we randomly selected a few Valley homes and compared their recent selling price to the so-called Zestimate it was given.
We found that a Central Phoenix home had a Zestimate of almost $619,000. However, a certified appraisal gave it a value $610,000, which is $9,000 less.
A Scottsdale home we found had a Zestimate of just over $229,000. However, a certified appraiser said its value was more like $262,000. That's actually $33,000 more than the Zestimate.
And on a Gilbert home, Zillow said it was worth more than $266,000. But it was appraised at $280,000 which is a $14,000 difference.
"Well, you know, sometimes it's accurate and sometimes it's off," Wegner says, and he's right.
Remember, certified appraisers compare homes in the same area, and as identical to each other as possible. They then assign an accurate value.
However, Wegner says Zillow does it a little differently by compiling a bunch of homes in a neighborhood, whether it's three bedrooms or found bedrooms.
It then computes an average and then spits out a Zestimate which may be higher or lower than the actual value. Wegner says, "They (Zillow) are going to do an average cost per square foot. They're going to multiply it by your square footage and that's where they come up with your Zestimate."
Zillow, however, disputes that, saying it has a secret formula that it uses to calculate values. Because it's proprietary, Zillow is not willing to discuss how they arrive at their Zestimates.But as 3 On Your Side discovered, Zestimates can be significantly different from true appraised values.
Zillow wrote 3 On Your Side an email regarding our news report. The unedited letter in its entirety states:
"Zillow’s goal is to give homeowners and potential buyers, sellers and renters every available tool – including Zestimates, recent sales data and listing prices – to help empower them to make the most informed decisions possible. We have always encouraged consumers to talk with real estate professionals regarding their options and personal situations, and believe these tools can and do help to complement those discussions."
To learn more, visit www.zillow.com.