Zillow.com Online Home Value Estimates - How Good?
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If your thinking about a reverse mortgage, one key piece of information you’ll need is fairly good idea of what your home is worth. When it comes time to apply for the mortgage, of course, a formal appraisal will be conducted and used to determine the loan amount.
But prior to application, most borrowers want to get a good idea of the costs-benefits associated with a reverse mortgage. In the past, we’ve recommended www.zillow.com as a good place to get a free and immediate estimated value for your home. Zillow.com’s estimates are based on sales transactions for similar, nearby properties.
The Wall Sreeet Journal recently ran an article on the accuracy of the Zillow.com estimates. Essentially, they compared Zillow’s estimates for 1,000 properties with actual recent sales for those same properties prior to Zillow updating the new sales figures. Results?
A Wall Street Journal analysis of 1,000 recent home sales shows that Zillows “Zestimates” are often very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible - off the mark by more than 25% on one in 10 homes…Zillow came within 5% of the price in a third of the transactions studied by the Journal. It was more than 25% off target on 11% of them.
Ziilow is most accurate in the mid-price housing market, particulalry in areas where there are lots of comparable home sales. It is less accurate in high- and low-priced housing markets.
Lesson: Zillow is a great, easy to use tool but use it with care. Often, a perusal of of the Sunday real estate section will give you a good idea of how accurate Zillow’s estimates are.
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