What Does Zestimate Mean in Real Estate?
- Published on
- 7 min read
-
Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re considering selling your home, your first thought is likely: How much is my home worth now? Over the past five years, home prices have surged 54%. Savvy homeowners are monitoring property values more often, and one tool they use is the Zestimate.
But what does Zestimate mean, and how can it help you estimate your home’s value?
In this brief guide, we break down what you need to know about Zestimates, their accuracy, and how they’re calculated. We’ll also share a few home valuation tips and other free online alternatives.
Start With a Free Home Value Estimate
Enter a few details about your home, and we’ll provide you with a preliminary estimate of value in less than two minutes. This won’t replace a home appraisal, but it can be a helpful starting point.
What does Zestimate mean?
A Zestimate is an estimated market value for a home, provided by Zillow, the largest online real estate marketplace in the U.S. It uses a proprietary algorithm to predict a home’s worth based on various data points. Zestimates are intended to give homeowners a starting point for understanding their property’s value.
Why you might want a Zestimate
Knowing your home’s estimated value can be beneficial for several reasons:
- Preliminary home sale listing price estimates
- Calculating the possible net proceeds of a sale
- Financing or refinancing a home loan
- Obtaining homeowners insurance
- Developing a home pricing strategy
- Financial and estate planning
- Baseline for selling a home in the future
How is a Zestimate calculated?
Zestimates use a sophisticated neural network-based model — what’s often referred to as an Automated Valuation Model or AVM. Many reputable real estate companies provide free AVMs that incorporate data from numerous sources. These include:
- Public information such as county and tax assessor records
- Feeds from hundreds of multiple listing services and brokerages
- User-submitted data, such as unique property details
- Recent nearby comparable home sales (comps)
A Zestimate will also incorporate:
- Home characteristics (square footage, location, number of bathrooms)
- Market trends, such as inventory and demand levels
- Seasonal changes in housing markets
How accurate is a Zestimate?
Zillow currently has data for over 110 million U.S. homes. The company cites the following nationwide median Zestimate error rates:
- On-market homes: 2.4%
- Off-market homes: 7.49%.
According to Zillow, Zestimate’s accuracy can vary and depends on the availability of data where the home is located.
“Some areas have more detailed home information available — such as square footage and number of bedrooms or bathrooms — and others do not. The more data available, the more accurate the Zestimate value will be,” the company states on its website.
What can affect Zestimate accuracy?
While Zestimates offer a useful starting point for understanding your home’s value, several factors can impact their accuracy:
- Data availability: Zestimates rely on available data, and if certain data points are missing or outdated, the estimate may be less accurate.
- Property uniqueness: Unique or custom-built homes may not have many comparable properties, making it harder for the algorithm to estimate accurately.
- Local market conditions: Rapidly changing market conditions can affect the accuracy of Zestimates, as the algorithm may not immediately reflect recent trends.
- Home updates and renovations: If you’ve made significant improvements or renovations to your home, the Zestimate might not reflect these changes unless updated data is provided.
- Mistakes in system data: The date and price of a home’s last sale play a big role in the value estimate. If this information is inaccurate, it impacts comparable sales and can throw off a Zestimate.
- Tax assessment errors: Since Zestimantes also use property tax records, if an assessor enters wrong information or if the assessor’s database has inaccurate facts about the home, the assessed value may be incorrect.
Is a Zestimate considered an appraisal?
No, a Zestimate is not considered an appraisal. An appraisal is a professional, detailed evaluation of a property’s market value conducted by a licensed appraiser. Appraisals involve a thorough inspection of the property and an analysis of various factors, including the condition of the home, recent sales of comparable properties, and current market conditions.
Zestimates, on the other hand, are automated estimates generated using algorithms and publicly available data. While they can provide a rough idea of your home’s value, they do not have the same level of accuracy or reliability as a professional appraisal.
If you’re looking to sell your home, an experienced real estate agent will do a comparative market analysis (CMA) on your property to determine the best listing price. A CMA is a detailed report evaluating your home’s features, size, location, age, and other details in relation to similar nearby houses that have recently sold. Many agents will provide a CMA for free as part of an initial consultation.
Zestimate alternatives
If you’re looking for more online options to estimate your home’s value, several popular home value estimators can provide additional perspectives:
HomeLight’s Home Value Estimator
HomeLight’s home value estimate tool analyzes millions of home sale transactions, collects details about your specific property through a short questionnaire, and pulls in the most important elements of a CMA. Homeowners then receive a preliminary estimate of value in under two minutes sent to their email inbox. This is a trusted, easy-to-use AVM from a well-established real estate solutions company.
Redfin Estimate
Enter your home’s address, and Redfin Estimate will provide an instant home-value estimate and let you see nearby sales and market trends. As the homeowner, you can also use the “I’m the owner” feature. After verifying ownership, you can update or make corrections to the Redfin property details. Like Zillow, Redfin pulls data directly from the MLS and calculation value from comps and public records.
Realtor.com
Realtor.com’s AVM also incorporates basic property characteristics, local market data, and price trends to calculate a home value estimate. In addition, it gathers estimates directly from multiple independent AVM providers. Realtor.com sources its estimates from Collateral Analytics, CoreLogic, and Quantarium so it can offer consumers access to the same providers used by professional real estate lenders, investors, and brokers.
Chase Home Value Estimator
This tool provided by Chase Mortgage Services is powered by robust data collected from over 10,000 government and proprietary sources. Unlike other estimators, Chase doesn’t ask for user-submitted information upfront, but a user can adjust the number of beds, baths, rooms, and square footage fields to account for recent upgrades or forecast the value of a renovation project. The Chase AVM also displays a map showing recent nearby home sales.
Bank of America
Bank of America’s home value estimator tool displays MLS property details, such as whether the home has a garage, swimming pool, or fireplace. Users can scroll down to see a shaded line graph showing the home’s value over a 10-year period, as well as a map of nearby comparable homes.
Eppraisal
Like Zillow, Eppraisal’s estimator tool accesses public county records and compiles the data from up to 20 recent property values and nearby comparable properties. To calculate a value range, Eppraisal AVM plugs this information into a proprietary mathematical formula that takes into account each home’s characteristics and comps in the area.
How Much Will I Make Selling My Home?
With HomeLight’s free Net Proceeds Calculator, you can estimate the cost of selling your home and the net proceeds you could earn from the sale.
Top agents sell homes for more
If you’re checking your home’s value to plan a home sale, we recommend connecting with a top local real estate agent who can conduct a comparative market analysis. A seasoned agent can help you lock in an effective pricing strategy, calculate the cost of selling your home, and give you a clearer idea of the net proceeds you can expect from the sale.
HomeLight’s free Agent Match tool analyzes over 27 million transactions and thousands of reviews to determine which agents have the best sale-to-list ratio and are most qualified based on your needs. What’s more, our data shows that the top 5% of agents sell homes for up to 10% more than average agents.
Header Image Source: (paulbr75/ Pixabay)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
