What an Automated Home Value Actually Measures, and What It Misses Here

Most homeowners check their online estimate a few times a year. Some check it monthly. It is free, it is instant, and it puts a number on the largest asset you own.

I spent 20 years as a state-certified appraiser before focusing full time on brokerage. Here is what that number is, what it does well, and where it falls apart in Western North Carolina.

What it is

An automated valuation model. It pulls tax records, prior sales, square footage, bed and bath count, and recent nearby transactions, then runs a statistical model against them. Rarely does anyone visit the property, and never does anyone go inside.

For a subdivision of similar homes on flat lots with recent sales next door, it works reasonably well. That describes a very small share of the housing stock in our area.

The version you are looking at is the least accurate one

This is the part almost nobody knows.

• Zillow publishes its own accuracy data. Nationally, the median error is 1.83 percent for homes actively listed for sale and 7.01 percent for homes that are not listed.

• Your home is not listed. You are looking at the second number.

• Median error means half of all estimates are off by more than that figure. It is not a ceiling.

• The on-market number is also flattering. Accuracy is measured against the last estimate before the sale closes, by which point the estimate has already drifted toward the list price. The model is being graded after it saw the answer.

• Zillow says the same thing in plainer terms on its own site. The Zestimate is not an appraisal and should not be used as a substitute for one.

On a $600,000 home, 7 percent is $42,000. That is not a rounding error. It is the difference between pricing correctly and sitting on the market for a long time chasing price reductions.

The best illustration of this came from inside Zillow. In February 2016, Spencer Rascoff, then the CEO of Zillow Group, sold a Seattle home for $1.05 million. The day after closing, the Zestimate on that property still read $1,750,405. That is roughly 40 percent above what the market actually paid.

If the model can be 40 percent off on a house owned by the man running the company, it can be off on yours.

Six things the model cannot see in this county

1. Views. A long-range mountain view and a view of the neighbor's roof produce identical data in a tax record. In this market they are not remotely the same number.

2. Topography and usable land. Two five-acre parcels, one gently rolling and one dropping off at 40 percent grade. Same acreage in the record. Very different value, and very different development potential.

3. Access. Shared driveways, easements, flag lot configurations, and gravel road frontage all affect marketability. None of it is in the data the model uses.

4. Well and septic versus public water and sewer. Buyers price this difference. Automated models generally do not.

5. Unpermitted or miscounted finished space. Finished basements, enclosed sunrooms, and converted garages are frequently wrong in tax records, in both directions. If the square footage input is wrong, everything downstream of it is wrong.

6. Post-Helene condition and flood designation. Two houses on the same street can sit in very different positions on repair status, elevation, and insurance cost. That gap is real and the model does not capture it.

Every one of these is something an appraiser or an experienced broker adjusts for by hand. The model has no mechanism to do it.

What I would actually do with the number

• Treat it as a starting range, not a value. It is useful for spotting direction over time, not for making a decision.

• Do not use it to set a list price, decide whether to refinance, or evaluate a cash offer. Those decisions need real comps with real adjustments.

• Check the square footage and bed and bath count it has on file for your home. Errors there compound into everything downstream. Understand before you correct anything that the county record also drives your assessed value, so a correction upward can raise your property tax bill. Know which direction you are moving and why.

If you want to know what your house is actually worth today, reply with your address. I will schedule a no pressure, confidential walk through of your home and help you know exactly what it would sell for in today's market. No cost and no obligation to list.

I would rather you have an accurate number and do nothing with it than an inaccurate one you act on.