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I see many videos like this and one thing they tend to have in common is that they are asking the wrong question. They ask how accurate is the Zillow Zestimate, but the correct question is how accurate is the Zillow Zestimate compared to other estimates?

When it comes to most real estate agents, the answer to the right question is, we don’t know. The reason we don’t know is that unlike Zillow, real estate agents don’t make public predictions and I suspect if they did, the pick 3 and guess method called a CMA (comparative market analysis) that a typical agent would use, would on average yield far less reliable results than Zillow’s algorithm.

As example, in Highland Park Illinois, Zillow’s prediction is within 5% of the actual sale price 53.2% of the time and is within 10% of the actual sale price 75% of the time (try asking a real estate agent for these figures). The average list price to sale price ratio for Highland Park is 88%. So, one can say that 75% of the time Zillow’s prediction is at least within the total discount rate for sold homes in Highland Park.

So while an algorithm like the Zestimate certainly isn’t the end all of estimating likely sale price, it is a useful tool with a known error rate. More than one could say about many real estate agents.

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