Here’s how I explain to homeowners the issue of AVM accuracy.
How accurate are Zestimates, or any other online, automated valuation models (AVMs) available to homeowners these days? I even have a great valuation tool that I use (see the links in my email and blog page), and it’s a wonderful starting point, but homeowners should know that the accuracy of online estimates depends on a few factors.
For example, if you live in a neighborhood with cookie-cutter homes that were all built around the same time by the same builder, your Zestimate may be more accurate. On the other hand, if you live in a neighborhood with a more diverse selection of homes (like where I live in the north end of Boise), you know very well that there can be a million-dollar home sitting next to a $250,000 home or even a home that desperately needs to be revamped. Those neighborhoods are harder for AVMs to calculate.
Also, Zillow doesn’t have access to any of the updates you’ve made to the home. Do you have granite in the kitchen now? Did you get a new roof? Did you lay down new flooring? Most of the updates you can make to a home aren’t logged in the public record, which is the primary data source for a Zestimate. So how can Zillow really claim to know your house’s value?
On top of this, Idaho is a non-disclosure state, meaning that our sales prices are not recorded and made available to the public. This makes things especially hard for Zillow and other AVMs to find any sort of reference point for your home. That’s probably why Zillow even makes this important disclaimer on their site: Only use Zestimates as a starting point. In essence, they acknowledge that their estimate needs to be taken with a grain of salt.
There’s nothing wrong with using a Zestimate as a reference point when starting out, but it definitely should not be used for final pricing. It’s best to enlist the expertise of a real estate professional who has been inside countless homes within your area, has access to up-to-date MLS information, and can actually take into consideration any improvements you’ve made.
95% of Zestimates are within 10% of the sales price, which is a pretty large margin of error when you think about a home’s value; if you have a $500,000 home, Zillow’s estimate could be a whopping $50,000 too low or too high.
I encourage you to find out what your Zestimate is and then give me a call so we can validate it together. I’d love to use my experience and industry resources to help you identify an accurate figure for your home. If you have any questions about AVMs or real estate in general, please reach out to me by phone or email! I look forward to hearing from you.