Zillow is great for seeing how much a property is worth, enabling you to see if your home’s value has appreciated enough for refinancing and you can even take a sneaky peek to find out how much a friend or acquaintance paid for their property.
The company offers information on more than 100 million homes in the US but an article in Investopedia has pointed out that the numbers used might not be as accurate as you imagine. The algorithms used by Zillow are updated three times a week, based on data submitted by users and public data. According to the company the vast majority of estimates are within 10% of the selling price of a property but these estimates can only be as accurate as the data supplied for their analysis. This does mean that if the number of bathrooms or bedrooms and a home, the lot size or square footage is inaccurate then the estimate will be inaccurate as well.
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It is possible for users to correct these mistakes but Zillow does point out that updating property details won’t necessarily result in any change in the homes estimate as for example having another bathroom or bedroom may not affect the overall value of a property very much in a particular region or town. As well as accepting data submitted by users, Zillow gets around the problem of inaccuracy by reporting estimated value ranges for properties. The smaller the range the more reliable the estimate as this indicates the company has more data available for that property. The article suggests looking at the high and low end of the range will give you a better idea of a property’s worth.
Zillow takes into account the date and price of the last sale of a property and sometimes this type of data can make up a big part of the estimate. This does mean that if the information is inaccurate it will not only affect the estimate for that property, but may affect estimates for other homes in the area. Other data used includes the actual property taxes paid, as well as exceptions to tax assessments. Sometimes property values provided by tax assessors can be inaccurate meaning the assessed value may be too low or too high.
The unique features and upgrades of a home are another area where Zillow can make inaccurate estimates as thecompany will have no way of knowing about these improvements unless the local property tax assessor also knows about them. Upgrades that require permits from the city are more likely to be accounted for as the information can be entered into public record. However the article does caution that upgrades aren’t always worth as much as you think on the value of your home.