How accurate are Zillow.com’s “Zestimates”?

Zillow.com’s “Zestimates” of home values are vastly inflated, according to a new study by the Appraisal Institute, published in its quarterly journal (see the complete study below). The study compares Zillow.com’s home values with the actual sale prices of 2,045 single-family homes in 2006 in Arlington, Texas — the market where Zillow.com claims to have its highest accuracy rating. Zillow.com was off by an average of 11.7 percent, or $13,576 above the actual sale price, with 40 percent of property values inflated by more than 10 percent, the study shows. Meanwhile, only 0.88 percent of values were underestimated by 10 percent or more. In a statement provided to The Real Deal, Zillow.com called the study “out of date and limited in scope,” noting that the study compares sales from 2006 and Zestimates from January and February 2007: “apples and oranges as it’s two separate periods of time,” the statement says. TRD
Appraisal Journal: Zillow’s Estimates of Single-Family Housing Values