Have you ever gone online to find a price estimate for your home? One of the most popularly used price estimators is Zestimates. Consumers use a key feature on Zillow to see how much homes are worth. Zestimates are calculated through data from public property records, tax records, comparable sales, and user-submitted information to form an approximate market value for a home.

What is the margin of error?

According to Zillow’s Zestimate page, “The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 7.5%. This means that the Zestimates for half of all on-market homes are within 2% of the selling price, and half are not.”

Zillow’s algorithm refreshes for all homes multiple times a week, based on information from both public data and user-submitted data. Zestimates are insightful but can be off for various reasons. At the end of the day, Zillow is a computer that follows algorithms. It can’t see inside your home, it doesn’t know what features it has, and it doesn’t consider your neighborhood versus another in the same zip code.

How to use online home price estimates

Though the home prices you get from online estimates should not be used in place of an appraisal, it can be a good starting point in home valuation. The best way to determine the actual current market value of a home is to get in touch with a realtor and request a comparative market analysis (CMA) or to get an official appraisal. 

Like a Zestimate, a CMA will pull data about the home, public records, and comparables in the area. However, a CMA will be more detailed and will have the advantage of a Realtor’s industry experience and local market expertise, including their ability to consider any and all details. Many Realtors, including Real Estate 38, will do a free CMA for homeowners or homebuyers.

The Bottom Line

Zillow knows its Zestimates need much more improvement but you can’t expect perfectly accurate estimates from competing sites, either. The biggest takeaway is for homeowners to use these online price estimates as a broad guideline supplemented with other research—and most importantly not be considered an appraisal. 

These estimates can be helpful, but computers can’t beat expertise, so be sure to contact your local real estate agent to learn what your home value truly is.