Zestimate® is an online home valuation model developed by Zillow to estimate a home’s value. “While automated home value estimation tools, like Zestimate, can help with a ballpark price, they are often significantly off from reality,” said Steve Goldman, CEO of Colorado Group Realty. “In a small market like Steamboat, it’s even more challenging for an online tool to get it right because there simply are not enough data points.”

Zestimate utilizes an algorithm which combines data from county and tax assessor records, feeds from listing services and direct input on a property’s facts and features, which homeowners can update. 

Their nationwide median error rate for homes that are not actively listed for sale is almost 8%, while the error rate for homes currently listed for sale is around 2%. On-market data is supplemented by listing price, description, days on market and comparable homes in the area. The window for error is greater in a location like Routt County, where comparables can be challenging to find. Geographically, the data Zillow uses is much broader than your neighborhood, or even town, which adds to the challenge. Off-market data pulls in tax assessments, past sales and other publicly available records. The more data, the more accurate a Zestimate can be. 

Prospective buyers are using Zillow and other online valuation sites, like Trulia and Redfin, as a starting point when they begin the process of buying a home. It can serve as the first impression for buyers, therefore maintaining accurate information and updates on a property may be key to attracting interest. 

Homeowners can add details on upgrades, heat sources and efficiency, architectural features, amenities or unique home features. A Zestimate will only change if the algorithm finds value in the inputted data. Algorithms change over time and Zillow makes updates every year or two. While Zestimates can offer a useful starting point, they are nothing more than an informational tool to be combined with other real estate services.