I recently read a really interesting blog article from an appraiser in Philadelphia titled “Zillow vs. The Coyle Group.” In the article, Michael Coyle analyzes more than 20 of his most recent appraisals and compares them to what Zillow says they are worth through his Zestimate. Since sites like these seem to be gaining popularity among consumers in recent years, I thought I’d do my own analysis.

The results may surprise you, they did to me. Of the 20 properties analyzed, many of which were recent sales, Zillow differed from appraised value by more than 5% in 16 of them and the median difference was 20.16%! And the four that were within the 5% were recent sales in the last 6 months. That means that, with a median home of $300,000, Zillow’s estimated value is outside of a median of $60,000. Another interesting stat is that there were 10 high/overvalued properties and 10 low/undervalued properties. To further corroborate my results, I compared them to The Coyle Group and noted that they found an average difference of 18.95%.

Digging into individual properties, I was unable to determine what exact factor led to some of the largest discrepancies. For example, the Glencoe Colonial property is currently a 1,100 square foot property. ft. split level slated for demolition and a new 3,200 sq. ft. foot house built. It is listed for $1,199,000 (the exact value from Zestimate) and is under contract for around $1,050,000. This would lead me to believe that Zillow is giving the most weight to the MLS listing price and ignoring the actual features of the property. However, the Zestimate was 41% off the Portage Park bungalow, which was listed for $460,000 and sold for the same price. In this case, why would the Zestimate be $273,265? You must have ignored the list and sales price when it seemed to be based solely on the list price of Glencoe’s proposed construction. Yeah, I’m scratching my head too.

While I’m not here to break down the Zillow method or algorithm used to determine values, I do want to caution any prospective home buyer/seller against trusting Zillow values ​​and I advise you to hire a certified appraiser to make sure. that all factors have been included in the opinion of market value. This will prevent your home from listing too high, which could lead to your home being on the market much longer than necessary. It will also keep you from listing your home too low and potentially leaving money on the table.

You can read Zillow vs. The Coyle Group here.