Let's talk about the Zestimate accuracy. So number one, is it accurate? Can you rely on it? And can you change it? So we're going to talk a little bit about that in figuring out your home's value. So if you're questioning the Zillow Zestimate, you're probably in the right place.
Number one, you're probably looking for the value of your home. And to be honest, it's going to be a quick way to find a general range of what your home could sell for, but it's not going to be a super accurate depiction of how much your house is actually worth.
The way I like to think of it is similar to how a soft pull on your credit works and a hard pull on your credit works. A hard pull on your credit shows the full picture. A soft poll only shows part of the picture.
So I tell people with soft and hard pulls are like a soft credit pull is like throwing a blanket over the top of a credit score. We get an idea of what it looks like. We can see if it's moving and how it's going up or it's going down, but we can't really tell all the details.
That's very similar to the Zestimate in it's going to tell you an idea. It's if you took your home's value and threw a blanket over the top of it, you can get an idea of what's going on how high it is or how low it is, and if it's moving with the market, but it's hard to tell a definitive number.
One of the main reasons why it's difficult is because home values, even if they vary by a couple of thousand dollars, that's a couple of thousand dollars in your pocket that you're either going to get at closing, or you're not going to get out closing depending on the purchase price of your home. So you want to know if that number is accurate, to begin with. So the short answer is the Zestimate is it's going to give you a ballpark, but it can be pretty that can be a pretty wide ballpark.
These are actually some stats from Zillow. So here you can see on that middle or the second to the left column, the median error through different cities, that's averaging around 2%, which means that's a 2% variation from the median home price.
So we can see homes with assessments on the column next to that, and then the column after that, within 5% of the sales price we can see is hovering around the 86% range. So that means that four homes are actively listed. You can expect that about 85% of the Zestimates are correct.
However, they publish that if it's an active listing for homes that aren't actively being listed. That number drops all the way down to 35% accuracy, which is pretty far away.
But the nice thing about the Zestimate is that they're providing a very easy way for you to see the value of your home if you're just entertaining the thought of selling your house, it's going to be really nice to look at this estimate. But also look at what are other homes selling for around your area, and what's the trend in your neighborhood. They're going to show you that information as well. And then you can start to look and compare how does your house compare to others.
Because the main thing that Zestimate cannot do is actually understand a market. The Zestimate comes from just data. It's all about data. It's just a bunch of zeros and ones and trying to bring a home value together. What it can't tell you is did you remodel the bathroom last year? Is your roof deteriorating? It can't tell these things. And so all it's doing is trying to put numbers together and say, here's the best guess of what it is.
Even on Zillow site, they're going to tell you, that this is a good starting point but you're going to want the professional opinion of someone who knows the market and understands what's happening. So one way that you can get that is a realtor is going to be able to give you a CMA, a Comparative Market Analysis, to be able to actually look at what the home could sell for. Then they're also going to help you find how to price your home competitively, along with some of your goals in mind.
Just because the Zestimate gives you a high number and it might even give you a low number. It doesn't mean that's the final number there. This estimate might say your home is worth $150,000, but you very well could put on the market and sell it for 180 or a 190.
Those estimates are just a good starting point. It's going to show you a ballpark, but it's not going to give you the full picture of that. You want to talk with the realtor who can actually pull up some data and put together a really good picture for you. And then also an appraisal is going to be helpful in finding the value of your home as well.
So here's Zillow's Zestimate page. This is going to go over how they arrived at that data. They're going to show you some of their error statistics as well. And I think that the fact that they publish this is incredible, right? They're coming up front saying, Hey, this is just a valuation model.
This is not a true picture of the value because they're publishing the fact that it does have errors and they're recognizing that, and they're showing you what the statistical errors of Zestimate is. So I think it's awesome that they're doing that.
That means that this is just a tool. This is not the final say on what your home value is. This is just a tool for you to use, to find the momentum of your home and a kind of a ballpark of where it's at. So you can start as a launching point. So I hope this helped you get a better idea of the Zestimate as far as changing your estimate. You absolutely can do that. Most people don't recognize you can, and the way you do that is you actually go in and claim the property in Zillow and add in some information about it to change it.
So hopefully this gives you a clear picture of Zestimate and its accuracy. It's a good starting point, but it's not going to be a hundred percent accurate and it's probably not going to be a good place for you to base all of your expectations on.
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