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Our test property and its comparables had the wrong number of bedrooms and bathrooms, for example. Real estate agents and appraisers rarely use comps that sold more than 6-12 months from the date of the home’s valuation. But Bank of America regularly uses comps that sold more than a year ago. Bank of America is one of the few large banks offering a free home value estimator, but the bank’s size and mortgage experience don’t translate into more accurate home valuations. Zillow Zestimates rely on the MLS, tax records, and user-submitted information to complete its Zestimates, which are frequently inaccurate.
It is a starting point for home buyers and sellers to understand what a home is worth. To get an estimate of a home’s value, Zillow takes into account the prices of comparable homes in your neighborhood, as well as the local market conditions. While spiked mortgage rates corresponded with a huge decline in demand, it hasn't caused sellers to rush for the exits. In fact, new listings on Realtor.com are down 17.25% on a year-over-year basis.
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Redfin has less coverage than Zillow, with home value estimates for just 92 million homes, or 12 million fewer homes than Zillow. So Redfin Estimates are effectively useless for millions more people than Zestimate is. Zillow has one of the largest databases of online home values, covering 104 million homes, or about 75% of all homes in the country. Zillow’s — and its sister site Trulia’s — Zestimate is the most popular online home value estimator and the best overall. We give it a four out of five-star rating — among the best in the business, but not perfect.
This guide draws on hundreds of hours of research done by Michael and the team at Real Estate Witch. We tested dozens of home value estimators using test properties across the country to find the ones that provide the best value for you — and to eliminate those that didn’t make the cut. For example, one home value estimator may place more weight on a renovated kitchen than another one. Or one estimator may only use sales data going back one year, while another uses sales data going back two years. So the risk of a home value estimator overestimating what a property is worth could translate into you making less than what you expected — or even losing money on a property.
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They are often high-turnover properties neglected for months or years, and they often come with a host of unpleasant surprises. The estimate is based on the data you provide and then adjusted to reflect what the company thinks is a more accurate figure. Zestimate is Zillow’s estimate of the current market value of a home. It’s calculated by taking publicly available information about a home and using an algorithm to come up with a figure that reflects the value of the home as it stands today.
For sellers, a home value estimator will give you a ballpark estimate of what your home may be worth, but don’t rely on it to set your list price. Home value estimators are inaccurate and a real estate agent can provide a more accurate estimate for free with a CMA. According to the company, its national median error rate for on-market homes is 1.9%. It means that Zillow’s estimated prices for houses for sale listed on its website would show an average error rate of about 2%.
Zillow (and Trulia) home value estimator
In states where house sale records are not publicly available, home value estimators have fewer data to rely on, which means they’re more likely to be way off. In many non-disclosure states, home value estimators aren’t even available at all. Even renovations — which algorithms do try to account for with varying degrees of success — can be hard for a home value estimator to judge accurately. For example, two properties may appear to be the same to an algorithm, but if one has a renovated kitchen, that can add $20,000 extra to the list price. Unfortunately, none of the paid estimators share information about the accuracy of their estimates, so we can’t recommend one over the other.
Most online estimators have a median error rate of approximately 2% to 7%. That might not sound like much, but it can represent tens of thousands of dollars on a home sale. Plus, the error rate gets even worse depending on where you live, whether or not your home is already listed, how long ago you bought it, and whether it was recently renovated.
If you’re an experienced investor, you may be able to run your own CMA. Realtors can see if other home sales included buyer concessions, which might result in a different sale price than what you could get for your property. Again, an algorithm will struggle to account for this kind of information — and it’s why CMAs are almost always more accurate.
Review the history of your Zestimate and/or the Zillow House Value Index for your neighborhood in order to to examine house value appreciation in your local market. "This will be the first spring selling season since 2008 where mortgage rates are ~6%, so we're expecting a bumpy ride in general for sellers, especially if the economy is officially in a recession." Every quarter, Moody’s Analytics assesses whether local fundamentals, including local income levels, can support local house prices. Thesefrothy markets include places like Boise("overvalued" by 74%) and Austin ("overvalued" by 61%). Shortly after mortgage rates spiked this spring, the overheated U.S. housing market cooled. That swift pullback in buyer demand finally gave inventory breathing room to rise.
It is because sellers must compete with other bidders and often can’t find the time to make repairs and upgrades before the sale. If there is a high turnover rate and property sales are actively occurring, your estimates will be more accurate. Zillow’s proprietary algorithm is constantly changing to adapt to the real estate market. The algorithm came into fruition with Zillow’s launch in 2006, evolving significantly over time. You can also use the comparison feature to track how much appreciation has occurred in your neighborhood, so you don’t get caught off-guard by rising prices.
Assessed value differs by tax districts, but usually it is based on your home’s condition, size, and features, as well as current local property values. In some areas, the assessed value is a percentage of the fair market value. They don’t have much to do with getting you the best list price for your home. That way, you can get an even more accurate home value estimate while also comparing different realtors to see who you think is the best fit for you. Getting an accurate home value is one of the most important steps in selling your house — and, in some cases, buying a house. Unfortunately, we found that Bank of America often uses outdated comparable sales to determine a home’s value.
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