I get asked this question all the time. Buyers and sellers alike want to be able to figure out what the value of a home should be. I have a separate post as to how I go about figuring valuation of a home, and you can read that post on Market Valuations here.
If you take a look at Zillow’s stats, they say for the Minneapolis / St. Paul area that they are within 5% of the actual selling price 46.3% of the time. That means they are off by more than 5% for 53.7% of the time.
In taking a look at several of my recent listings, my average is much better than 5%:
My estimated sale price of a townhouse in Mendota Heights was $165,000. The actual price it sold at was $168,000. That margin of error is 1.8%
I estimated a sale of a single family home in Eden Prairie at $450,000, and it actually sold for $451,500. That margin of error is 0.3%.
I estimated a sale of a single family home in South Minneapolis at $233,000, and it actually sold for $241,300. That margin of error is 3.5%.
I estimated a sale of a single family home in Edina at $390,000, and it actually sold for $405,000. That margin of error is 3.8%.
I had a recent New Brighton sale that I estimated would bring $219000, and it actually sold for $213,000. That is a 2.9% margin of error.
Between these 5 homes, my average margin of error is 2.5%.
Now, more about Zillow and their supposed accuracy.
This first example is of a house that I listed a few years ago. I told them it should sell for around $50,000, and they wanted to list the home for sale at $69,900, so that’s what showed up on the “For Sale” price of Zillow. The Z-Estimate of this house was at the time, $145,500. It ended up selling at $51,000. This margin of error is 285%!! Meanwhile, my margin of error is 1.9% on this house.
This second example is of a house my broker listed. My broker oversees about 1000 agents and most likely knows what he is doing. He listed this house in Faribault for $364,900. This house ended up selling for $340,000, while the Z-Estimate of this house was 182,500. Zillow’s margin of error in this case is 86%!!
So we’ve seen 2 specific cases of Zillow being extremely off in their valuation, both on the high side, and on the low side. With Zillow (or Trulia) being off by so much in either direction, how accurate can they be on any specific home? If you average these two cases together, you come out with an error margin of 17%. That doesn’t sound bad, but each specific case can be so far off.
You are much better served by calling me for an opinion on the price of your home. I tell it like it is. Give me a call today.