How accurate are Zillow estimates, or Zestimates, for homes in Denver? I hear this question quite a bit, especially when buyers see a house they really like, then look on Zillow and the Zestimate is $50,000 below the list price. Or the opposite with sellers who think their house is worth way more than it really is because of the Zestimate they saw on Zillow. So what is the answer? Let's take a look at how accurate Zillow believes they are.
If you go on Zillow's website and look at how they make their Zestimates, click here, you will see they rate Denver as a four star city, which is their highest rating for accuracy. So how accurate is a four star city. Zillow states that 28% of the time, they are within 5% of the final sales price. 48% of the time, they are within 10% of the sales prices and 70% of the time they are within 20% of the sales price.
Take a minute to let those numbers sink in. 70% of the time, 7 out of 10 houses that are sold in Denver are within 20% of the final sales price. Zillow lists the median sales priceof aDenver home at $254,100. 20% of that is $50,820.So when you are looking at the average home in Denver, this means its Zestimate could be off by $50,000! That is a huge difference and is why as agents we encourage people to not get to tied to values they see on Zillow.
Now don't get me wrong, Zillow is a great website and resource for buyers and sellers. It has great information about trends in different areas and what homes have sold for nearby. We have found that in the suburbs, the Zestimates tend to be more accurate. This is because homes in the suburbswere built mostly around the same time, there are multiples of the same floor plan, and finishes tend to be comparable. It is in the urban neighborhoods of Denver that Zillow tends to be not as accurate. It is very tough for a computer to compare a completely remodeled and updated Victorian on a tree lined street to a 50's ranch with no updates a block from I-70 that is the exact same size. Urban Denver homes vary so much, the only way to find a true value is to have a human pull comparables and compare apples to apples.
So in getting back to the original question, Zillow estimates can be accurate, about 20% of the time. But up to 70% of the time, the variance between the estimate and final sales price is just to great to be reliable. Zillow is a great place to start and can be helpful. It is just important to not become to tied to the values and instead to rely on a veteran Real Estate Agent familiar with the neighborhood to determine true market value.
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