Mike Rosenberg, the real estate reporter for the Seattle Times published an article on Thursday, January 31st titled “Zillow winners improve Zestimate”. In that article it refers to information provided by Zillow. It states that 50% of Zestimates fall between 4.7% too low and, 4.7% too high. So a home that sells for $500,000 home would have a Zestimate, 50% of the time, anywhere between $476,500 and $523,500.
Zillow also states that 1 in 8 homes will have a Zestimate that is 20% or greater that is too low or 20% or greater that is too high. So, 12.5% of the Zestimates (1 in 8 homes) will be less than $400,000 or greater than $600,000 for a home that sells for $500,000.
Between 50% of the homes where the Zestimate is within 4.7% of the sales price and the 12.5% of the homes that are greater than 20% of the sales price, that leaves 37.5% of the homes where Zestimates are somewhere between 4.7% accurate and 20% or more, inaccurate. The middle of that is 12.35%. So, 37.5% of the time the Zestimate is 12.35% accurate on average for this 37.5%. For a home that sells for $500,000, the average Zestimate would be $438,250 to $561,750. However, within this same group the most extreme errors could put the Zestimate at a low of $400,001 to a high of $599,999.
If this is confusing, just understand that the Zestimate has very little to do with the actual value of your home. That includes the 2016 home sale made by Zillow CEO Spencer Rascoff – who sold his Seattle home for 40 percent less than his Zestimate.