How Accurate Are Zillow Estimates?
ZESTIMATES IN TODAY'S REAL ESTATE MARKET
Before calling a real estate agent to sell your home, it is only natural to want to know the worth of your home and asset. This leads many potential sellers to reference Zillow for home value and pricing. However this might be a mistake especially when the Zestimate of a typical single-family home sold in Seattle is off by an average of almost $40,000. And the higher the home value, the wider the gap for the miscalculation. Zillow acknowledges that real estate agents are slightly better at predicting sales prices than computers even though realtor listing prices are within 1% of sold prices. Zillow is attempting to bridge this gap and catching up by creating a contest to improve the Zestimates model. To motivate the 200 teams that have already begun to improve the value algorithms, Zillow is awarding the winning team a top prize of $1 million. In order to win, the team must create an algorithm that more accurately predicts the sales prices for about 110 million U.S. homes. A hundred finalists will be chosen with the winners awarded in January 2019.
The stats as of now state that the median error rate is 5.6%. That means that half of homes end up selling within 5 to 6 percent of what Zestimate perdicts. While the other half of homes with Zestimates will be even higher. "For 1 in every 13 homes, the Zestimate is wrong by more than 20 percent."
Zillow has become a highly productive tool in selling homes however it has now become a hinderance to some realtors. One agent remarked that 90% of his clients quote Zestimates when they are ready to set the list price. However most realtors do not take into consideration Zillow's estimates due to it's inaccuracy.
Zillow and their estimates are probably the most-used computer estimate so their ambition to even further correct their home estimates is a great asset to the real estate market.
To read the full article, visit the Seattle Times.
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