I get a lot of questions about whether or not Zillow’s Zestimate can nail down the true value of a property. It turns out that a woman in Illinois has actually filed a lawsuit against Zillow, stating that their Zestimate is not the true value of her property.
My friend, Barbara Corcoran from “Shark Tank,” recently did an interview on “Good Morning America” about the lawsuit.
Basically, the woman in Illinois said that Zillow’s inaccurate Zestimate hurt her ability to sell her home. Barbara says that it makes sense in this case. “The woman felt her home was worth $626,000 and the Zestimate came back at $562,00. That’s a $64,000 difference,” says Barbara. “If a typical buyer checks her Zestimate, then they’ll think her home is worth less than what she’s saying.”
Barbara adds, “Her home was put in with a basket of other homes that have no bearing on the value of her home.”
“One in 10 homes get a Zestimate that is 20% under its actual market value.”
Zillow has since released a statement saying that their Zestimate is a good starting point for homeowners and buyers, but it’s not an official appraisal.
Barbara agrees, noting that the company has been very forthcoming about the fact that the Zestimate is not a real appraisal. However, the problem is that the buyer does not realize that Zestimates have a fault factor of 5% and that one in 10 homes get a Zestimate that’s 20% less than its true market value.
“They say it’s a starting point, but it’s not reliable,” says Barbara. “Every consumer out there knows about the Zestimate. They know to check it, and they use it as though it’s an appraisal. That’s the basis of the lawsuit.”
If you want to know the real value of your home, hire a real estate professional to compare your home to similar properties. The other way to figure out your home’s value is to pay for an appraisal. You can’t just rely on Zillow’s algorithm.
If you have any questions about your Zestimate or would like to learn more about home values in your specific neighborhood, just give me a call or send me an email. I would be happy to help you!