Internet Home Value Calculators - How Accurate Are They?

Real Estate Agent with GreatWest Realty DRE# 00827565

Occasionally, I will hear or read comments from homebuyers, homeowners, sellers and real estate professionals, about the value and use of online housing calculators that provide estimates of property value.

Earlier this week, I came across an interesting article in the Yahoo Finance section titled, “The Fuzzy Math of Home Values,” which delved deeply into this topic.


The article was written by Alyssa Abkowitz, of Wall Street Journal’s SmartMoney.  In one case vignette, Abkowitz showcased the dilemma of a Greater Sacramento homeowner.  The homeowner had invested hard work to turn his 6,500 square foot home near Folsom Lake, into an ultimate party pad.  The home boasted a custom wine cellar, game room and a home theater.  There was a wood-burning pizza oven, and searing station outside.  A pool overlooked the lapping waters of Folsom Lake.  BUT as the homeowner was finishing up on his home improvements, and delved into refinancing the $750,000 mortgage, and became startled when according to one popular real estate website, the home value had dropped over $200,000 during a recent seven-month stretch.

The SmartMoney article went on to say, "Another on-line real estate estimating website valued the home at a mere $640,500.  Adding confusion to the picture – a real-life appraiser had valued the house at $1.5 million."

According to SmartMoney Magazine, the calculations behind online estimates are adding confusion to an already tricky housing market.

As increasing numbers of consumers grope for information in this difficult housing arena, they often frequent websites which provide home-evaluation data to help ascertain value. 

 personal friend in Boise, Idaho, shared with me that she is getting ready to market her home this coming spring.  She has visited sites like Zillow,, and hoping to obtain an approximate value for her dwelling.  She lives in an area of mobile homes placed on city lots.  The vacinity abuts a new development of custom homes selling in the $500,000 range.  She states, the guestimator websites frequently place values on the neighborhood mobile homes, with the custom stick home evaluations - and the neighborhood custom homes at mobile home values. 


Yet another of my out-of-state friends is currently marketing their home with fair market list price, but each and every consumer, who visits the  listing on-line, is seeing a zestimate, approximately $75,000 below their list price.

According to the SmartMoney article, the on-line companies, which provide their valuation estimators, rely on the use of algorithms.  Because these algorithms often change, the values of homes often change.  According to the SmartMoney article, "this summer Zillow made adjustments that affected all of the 100 million homes in its database, and some home value quotes swung by hundreds of thousands of dollars in as little as a month." 

The SmartMoney article also addressed a special Louisville, Kentucky home, "which according to legend, acted as inspiration for Daisy’s home in The Great Gatsby, and quadrupled in value over 30 days.  While according to Zillow, a Brooklyn, N.Y. townhouse currently listed for $5 million, was valued at a jaw-dropping $31 million in the middle of the real estate crash."

According to the SmartMoney article, "The former owners of the “Gatsby house,” watched Zillow put a $331,000 value on the house in May.  In July it had climbed to $1.5 million.  Zillow claimed the lower estimate reflected errors in its statistical model."  The sellers had to fend off a stream of lowball offers before they ultimately sold their dwelling this autumn.

Zillow, Trulia, and all their competitors make clear their numbers are only guesstimates.  They present disclaimers about information and material consumers garner from their websites.  However, homeowners don’t always pay attention to the disclaimers. 


In the majority of the past 30 years I've been in this business, home evaluation has been an appraiser's job.  Some evaluation can come from the process of a CMA (Comparitive Market Analysis) performed by real estate professionals.  The process involves gathering data on recently sold properties in the vicinity, and comparing them with the home being evaluated or appraised.  Size, condition and characteristics, are components considered.  Unique qualities and added amenities, such as a swimming pool can add value.  Although the evaluation-appraisal process can be as much art as science, it is usually performed with an on-site visit to the subject property.  A component of the process that isn't performed by on-line guestimators.


The SmartMoney article written by Alyssa Abkowitz is really an in-depth piece that goes more deeply into the process of home appraisal and the use of on-line calculators.  I recommend consumers and real estate pros read it in its entirety.  It can be accessed via: “The Fuzzy Math of Home Values.”


Re-Bloggged 11 times:

Re-Blogged By Re-Blogged At
  1. Tamara Inzunza 11/17/2011 06:17 AM
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  3. Barbara-Jo Roberts Berberi 11/17/2011 08:57 AM
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  10. Praful Thakkar 11/27/2011 09:49 PM
  11. Mary Macy 11/27/2011 10:04 PM
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Comments 66 New Comment

Hal Tennant
Get a Zero Down Mortgage - How to buy a home with no money down
HomeTown Lenders

Hi Myrl,

This is a problem for Mortgage Loan Officers as well. Just try to tell a borrower their home didn't appraise for the value we need to refi even though Zillow says differently.

I used to be able to get my favorite appraiser to give me his opinion but can no longer do that because of the regulations forcing me to order my appraisals through Appraisal Management companies.

November 18, 2011 04:44 PM
Mitchell J Hall
Lic Associate RE Broker - Manhattan, NYC
The Corcoran Group

Myrl, Excellent post and great comments. Brad has some good points about how to use these tools. Fortunately in my market I seldom meet a seller or buyers who takes an estimate from zillow or any other tool very seriously. Consumers today are quite sophisticated and many have real comps and do research. a local real estate website is the most popular website that the consumers are paying attention to here. It gives closed sales data not estimates. NYC housing has too many variables for an online tool or algorithms to be accurate or even close. Online tools usually picks up data from city records but they may be wrong records.

The New York City department of finance even this disclaimer on their website:

The property tax assessment process starts when the city's assessors determine the market value of your property. Despite the name, this value has little to do with what someone would actually pay for your property. In some neighborhoods the market values are close to actual property values. In others they can be as little as 5% of true values. Even within neighborhoods there can be wide variations.




November 18, 2011 07:23 PM
Jim Frimmer
Realtor & CDPE, Mission Valley specialist
HomeSmart Realty West

Maybe if one of those online companies had a computer as powerful as Watson, they could actually create an algorithm that handles 100 million homes well. Until the, all real estate is local. Unfortunately, we can't get the national media to understand that.

November 19, 2011 05:28 PM
Roy Kelley
Retired Real Estate Broker, Maryland Blogger

Well done post.  I want my evaluations done by a local real estate professional.  Everything else falls into the category of guesstimates.

Enjoy the season of Thanksgiving and be sure to have your camera in hand to capture those special moments.


The Chrysanthemum Festival at Longwood Gardens, October 29 - November 20, 2011.  Our visit was on Tuesday, November 8, 2011.  Longwood Gardens is located in Kennett Square, PA.   Photograph by Roy Kelley using a Canon PowerShot G11 camera.

Roy and Dolores Kelley Photographs

November 20, 2011 05:41 PM
Praful Thakkar
Andover, MA: Andover Luxury Homes For Sale
Keller Williams Realty

Myrl, you are right - it's all fuzzy math! A buyer called me on my listing based on Zillow price 4 days ago because Zillow showed lower price than list price. Today I looked at it once again - and it is almost $50K more than it was 4 days ago. I am sure prices did not go that high in 4 days...

November 27, 2011 09:47 PM

Myrl Jeffcoat

Greater Sacramento Real Estate Agent
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