Key Takeaways:\u00a0<\/strong><\/p>\n The Zestimate is a home valuation based on a sophisticated algorithm that considers many factors and data points and is delivered in real-time for both on- and off-market properties. However, it\u2019s not the same as a professional appraisal conducted in person by a licensed expert.\u00a0<\/p>\n In-person evaluations take into account things an algorithm can\u2019t, such as the home\u2019s actual condition, upgrades, layout quirks, or neighborhood appeal. Naturally, those tend to be more accurate.<\/p>\n A property\u2019s Zestimate is calculated by complex software using an \u201cautomated valuation model\u201d that analyzes data points collected from users, public records, and multiple listing services. According to Zillow, here\u2019s what goes into that equation:<\/p>\n Zillow updates the Zestimate daily for millions of homes, and the model is constantly refined to improve accuracy. For example, listing price wasn\u2019t always a factor, but now it\u2019s a key data point for on-market homes. Additionally, not all MLSs participate in Zillow\u2019s massive data collection. This results in a much more limited data set, further skewing a Zestimate, so understanding your MLS\u2019s relationship with Zillow is also important.<\/p>\n Planned communities: <\/strong>They tend to have more accurate Zestimates because the properties are much more homogeneous, making it easier to calculate accurate comps.<\/p>\n <\/a>\n <\/li>\n <\/a>\n <\/li>\n <\/a>\n <\/li>\n<\/ul>\n<\/div>\n There is often a debate about the accuracy of the Zillow Zestimate, and we\u2019ve all seen the jokes. But as much as some real estate agents claim the Zestimate is completely inaccurate, it\u2019s not that cut-and-dry.<\/p>\n According to Zillow, there is a method to the madness regarding the Zestimate, which is a \u201cnationwide median error rate.\u201d For on-market homes, the error rate is 1.94%, and for off-market homes, it\u2019s at 7.06%. The table below illustrates how close the Zestimate comes to actual sale prices using hypothetical home prices ($200K, $500K, $1M) to show what 5%, 10%, and 20% margins look like in dollar terms.<\/p>\n\n
How Zestimate works and gets its data<\/h2>\n
How is a Zestimate calculated?<\/h3>\n
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Variations to consider\u00a0<\/h3>\n
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How accurate is Zillow Zestimates?<\/h2>\n
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