What is zestimate mean

A lot of homeowners, and I suppose some in the industry, seem to get tripped up into thinking a Zestimate is a home appraisal. Zillow explains right on its informational page that a Zestimate is not an appraisal, and cannot be used in place of an appraisal.

And the data they receive may be dated, incomplete or inaccurate, especially if recent changes have been made to the home in question, such as major home improvement, or if a home has just sold nearby. So what does that tell us? Well, it means Zestimates are exactly what Zillow says they are, a starting point.

The actual sales price could be entirely different. In other words, take them with a huge grain of salt, just like advertised mortgage rates. But still brag to your friends if and when your Zestimate rises! Read more: How much house can I afford? Appraisals can be a joke too. We just completed closing documents for a loan refinance. We had an appraisal done by a local appraiser, that our mortgage lender sent to our house, after an appointment was arranged by us. We thoroughly agreed with the appraised amount, and even have this same appraised amount, from another local appraiser.

Again, we objected, as all we had was the original appraisal figure done by a licensed appraiser in our state.. All references to an appraisal are now showing the desktop review appraisal amount, rather than the original appraisal amount. So, inputting this information may not have any effect at all. Along with accepting user-submitted data, Zillow deals with problems of inaccuracy by reporting estimated value ranges for individual properties. The smaller the range, the more reliable the Zestimate because it means Zillow has more data available on that property.

Looking at the high and low end of the range will give you a better sense of what a home is worth. Zillow calls its Zestimates a starting point to determine home values, so users should not consider them to be appraisals in any way.

Zillow factors the date and price of the last sale into its estimate. In some areas, this information makes up a big part of that figure. But if this information is inaccurate, it can throw off the Zestimate. The Zestimate also takes into account actual property taxes paid, exceptions to tax assessments , and other publicly available property tax data. Homeowners that see discrepancies can report incorrect sales data or tax records to Zillow online.

Sometimes a homeowner makes improvements or upgrades to a property, which should increase the value of the home. But, Zillow may not necessarily be aware of these factors. That is, unless the local property tax assessor has that information. If a homeowner takes out a permit from the city to make any upgrades, that information may be passed along to the property tax authorities and entered into the public record.

Zillow can only update its listings when this information is available. The more home sales there are in your area, the more data Zillow has about how much buyers think those homes are worth.

This makes Zestimates more accurate. So if you live in a hot market in the San Francisco Bay Area, your Zestimate might be more accurate than if you live in a rural town where people stay in their homes for decades and sales are rare. Zillow updates its algorithm as it comes up with more ways to improve its accuracy. When this happens, Zestimates can change significantly even though nothing has changed about those homes or the real estate market.

The team leveraged different factors affecting a home's value including public data, commute times, road noise, and other information to factor into its algorithm. The company was the subject of a class-action lawsuit, filed in by Chicago homeowners who claimed it misled homebuyers by providing them with very low figures. The plaintiffs also stated most users treated Zestimates like appraisals. According to a report by MarketWatch, Zillow, said the lawsuit had no merit, denying that its Zestimates were appraisals.

Instead, it called them a reference point where users can start their search for home values. The point is for homeowners to use prices from Zestimates as a broad guideline, and contrast these figures against other sources.

It should not, in any way, be considered an appraisal. A comparable market analysis from a local real estate agent and a professional appraisal of the home are the best ways to learn its value. Even these tools are imperfect: Sometimes there are no recent sales of similar homes, and appraisers —who are only human—may be somewhat subjective in their assessments. Lawsuit Claims Yes. We have earned an average rating of 4.

No real estate brokerage in Colorado has more reviews and a higher rating. Check out our Zillow reviews here. Zestimates are not so great at setting an exact value. Douglas County has the highest accuracy at 2.

See the full list here. A home that reeks of pets is not going to sell for as much as the exact same home that is odor free. Examples include: light or dark, airy or stuffy, open or choppy, fresh or dated, pristine or beat up? The Zestimate algorithm at least today has no way of baking these critical factors into the model. Zestimates have a hard time with luxury homes.