Source
r/RealEstate•
textrovert

How far off can online home value estimators be?

I'm in Michigan. I have owned my house since 2011, in a desirable downtown location within a mile of a huge university campus. I bought it for $195k. My husband and I are planning to move and sell the house at the end of this summer, so I've been trying to get a ballpark idea of how much value it has gained.

I've checked Zillow, Trulia, Redfin, my bank's estimator, and several others, and they all give me estimates between $302-335k. But I am extremely skeptical - someone bought the house next door within months of mine, for about $30k less than mine (it is smaller, has fewer bedrooms, one story instead of two, etc.). It went back on the market last summer, and when it did, its Zestimate dropped from $261 to $217k, and it sold for $190k. They did do a ton of renovations on it after that, but now its Zestimate is back up to $295k, close to my house's. It just seems not connected to what houses actually sell for. Another thing is that I wonder if the sites know that I'm in a flood zone, which I'm sure affects value negatively. Also, my tax assessment last year was $113k.

At the same time, I live in a highly desirable neighborhood and it seems odd that the house next door would sell for such a low price. The estimates don't actually seem crazy for the area. Honestly, even so, I'll be thrilled if it's worth even $50k less than the lowest online estimate. I'd be disappointed if it's worth $100k less than the lowest, though. Is it possible for all of these tools to be $100k+ off? I know you can't rely on them, but are they really completely useless?

Posted Nov 1, 2017, 10:22 PM UTC

39
MichaelBloggerWM•

I'd say +/- 20% is about right, interesting number to watch bounce around but not that useful for net worth planning. My home was at one point +$100k from what I thought it was worth on Zillow and now it is about -$30k. One day a few months ago it dropped in value about $90k, they must be tweaking the algorithm.

2
textrovertOPHomeowner•

What's interesting to me is that the estimates are all pretty close to each other, and they haven't really bounced much - they've climbed more or less steadily over the past 6 years. I'm not expecting them to be totally accurate, I'm just wondering if I can trust them to be within about 20% of the lowest. I'd be thrilled if the real price ends up being even 90% of what the lowest is saying, but I'm skeptical even of that.

1
MichaelBloggerWM•

You can always pay for your own appraisal, or talk to a few real estate agents to get more concrete numbers. Don't trust what you read online... ;)

1
aardyLender in Bay Area•

The owner of Zillow's own zeistemate (however that's spelled) was, famously, off by 40% compared to actual market value when it actually sold.

These are garbage data-points. Disregard them. Ask a realtor for a CMA.

1
bloqchains•

If you were to raze the house a rebuild it twice as nice, would zillows algo know? No. 20% seems fair but I dont put any real faith in them as an actual valuation tool. Focus on comparable sales.

1
textrovertOPHomeowner•

Redfin does base theirs on comparable sales. Their estimate for the house is actually higher than Zillow's. Hell, if it was even 80% of that estimate I'd be pretty happy!

1
BohlofFury•

It’s a running joke in the industry how awful and inaccurate Zestimates are. Only real way to find out is to get an appraisal.

1
midnightFreddie•

Those sites don't go inside your house. Hell, they don't even know if your house burned down last month or is painted with real gold leaf. They use algorithms to guesstimate values most likely by square footage, property size and location combined with comps.

I look at mine to gauge relative change in value, but I would definitely consult a professional--or do research if I were competent myself--if I needed to set a sales price or otherwise needed a "hard" number.

But ultimately anything is worth exactly what someone is willing to pay for it.

1
wamazingAppraiser•

They can be very far off. Those sites aren't even making an attempt to get things right, their goal is to generate marketing leads for agents (and charge them for them).

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