Are Online Home Estimates Accurate?

Posted by Anna Varnell on Monday, January 23rd, 2023 at 10:32am.

Popular online real estate marketplaces often offer some sort of home valuation tool that tells you what your house might be worth. You might not know it as a home valuation, but maybe by a catchy name for their estimates (hint: put a Z in front of estimates). We, as real estate agents, often get asked about these estimates whether it is listing their house or they’re looking to purchase a house. We understand that real estate is a large financial investment and you want to make sure you’re getting the best price possible whether that is buying or selling. We are here to help you filter through what’s accurate and what is not.

To start, let’s make sure we understand what a home valuation is. Home valuations take the facts about your home (square footage, number of bedrooms and baths, acreage, condition, etc.) and compare it to similar properties surrounding your home to give you the value of your home. In theory, an online estimate should be able to take these facts and run those numbers for you. Let's talk about how and why they are not always accurate.

Inconsistent data

A major issue with these sites is their data. The data that is used to compare information is public data, industry data, and user-submitted data which means that the data entered is subject to a bit of error or may not be updated. 

For example, per Zillow’s Zestimate page, “the amount of data [they] have for your home and homes in your area directly affects the Zestimate’s accuracy, including the amount of demand in your area for homes. If the data is incorrect or incomplete, update your home facts — this may affect your Zestimate.” Now, let me ask you this– if you are a homeowner, how many times have you updated your home facts online after making improvements or updates? This leads me to the next issue.

Updates & improvements are not reflected

When you update your home, sometimes this requires a permit and sometimes it does not. If your updates require a permit, that means that it will be recorded which will most likely (not always) reflect on online sites. Generally speaking, permits are most often required when adding on to a house. With that said, a lot of updates don’t require a permit. Cosmetic updates are a great example. Let’s say you purchased a home that had the same kitchen from when it was built in 1982 and you decided to update it. Maybe you chose to add new appliances, granite countertops, and freshen up the cabinets or maybe even completely replace them. Improvements like this do not require a permit in order to be completed AND they can add a lot of value depending on the current market. But how will the internet know that you have made these changes if you yourself do not add them? 

Again, per Zillow’s website, “The Zestimate’s accuracy depends on the amount of data we have for the home. Public records can be outdated or lag behind what homeowners and real estate agents know about a property, so it’s best to update your home facts and fix any incorrect or incomplete information — this will help make your Zestimate as accurate as possible.” They also state in the fine print, “to ensure the most accurate Zestimate, consider reporting any home updates to your local tax assessor. Unreported additions, updates and remodels aren’t reflected in the Zestimate.”

It's done by a computer

“The Zestimate is an automated valuation model calculated by a software process. It’s not possible to manually alter the Zestimate for a specific property.” This means that online sources are only as good as the words and photos online. If you’ve ever gone to see a property before then you know that pictures and reality can be VERY different sometimes. While this isn’t always the case, sometimes photos don't show every area of the home which can often hide defects or undesirable areas of the home.

Online sites also don’t have personal experience in the market. A real estate agent who is actively working in the current market can provide feedback on the current mindset of buyers and sellers which shifts along with the market - are you currently in a buyers market or sellers market? 

Can I use online estimates for anything?

Yes. Online estimates are just that. Estimates. They can be used as a general range in order to gauge a property, but they should not be taken as a strict value. Because many factors go into the value of a home, the sometimes limiting data these sites have can cause a large variation between their results and the actual value of the property.For example, if you are just getting started and are interested in a particular area of town, it can help you get an idea of the prices are in or around that location to help you prepare for your home search.

The best thing you can do is talk to a local real estate agent. An agent will be able to provide a personalized home valuation for your property or for a home you are interested in. Purchasing a home is a large financial investment and trusting a computer (not a person) to price a home could cost you thousands of dollars.

If you would like a free personalized home valuation created by a real estate professional, we would be happy to send you a detailed report. Fill out the information below and we will be in touch!


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