How Good is Zillow at Valuing My Home?

Everyone seems to love looking up home values on Zillow. But few people know very much about how accurate Zillow actually is.

Since we are talking about the most valuable investment most people will ever make, this is important to know!

This is what the results mean.

The graph above was copied directly from It shows how close their estimated values of homes were, compared to the actual sales price. This analysis was, of course, completed after the home was sold, and the sales prices were known. It covers different ranges of value “spreads.” For example, for our Denver market, the 67.9% figure, matched to the number on the top of the graph, means that 67.9% of the time, Zillow was within 5% of the sales price. That’s good for a computer program to predict. However, it may not be quite good enough for what someone selling their home or settling an estate may need. For example, if a home was being sold for $350,000 based on an estimate from Zillow, we see that there could be a margin of error of up to 5%, up to 67.9% of the time. The other 32.1% of the time could be much more inaccurate than that. Indeed, if we look at the graph, the remaining 32.1% of analyzed homes could have much higher margins of error of 10 or 20 percent. Is this important?  Let’s see how things might work out with a real-world example.

This is why this is important.

Let’s go with the best margin of error Zillow can produce, which would be a 5% error margin. A 5% error margin on $350,000 would be more than $17,000.  If a home sold quickly, chances are the error was on the low side and an astute buyer saw this and snapped up this undervalued home and saved a lot of money in the process. If the error was on the high side, chances are the home would be passed over in favor of more reasonably priced homes.  Either way, this miscalculation could place the seller in a bad situation. If this is money out of your pocket, this is a lot of room for error to accept. Of course, Zillow could be exactly right for its value estimate. Or, it could be off by double that amount too, for the 10% error margin. That could be a whopping $34,000 room for error from a possible miscalculation. That could again double if we consider the 20% margin of error, which would be $68,000.

Only careful analysis of similar style, age, size, and condition homes within the market area can produce credible results. And not many people know that the markets change often, just as the stock market does. Further complicating matters are sellers that don’t understand how to value property features and instead play follow the leader to price their home to what their neighbors did, which of course may be wrong as well.

Maybe Zillow could be a starting point for a value estimate. However, as we have seen, it should not be relied on to determine an accurate estimate of value. Don’t settle for anything less than a seasoned expert when it comes to your home valuation! Our many years of experience will ensure the best results for you.

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