Zillow Estimates: Not as Bad as You Might Think

As the proud owner of my second home (no, not at the same time... we sold the first to buy the second), I'm fascinated with Zillow, which provides, among other services, an estimate of what your home is worth, as well as your neighbor's home, every home on your block, and every house in the country, pretty much. (I put it at #5 on this fanciful "top 10" list for Wired.)

However, I've always felt Zillow's accuracy left a bit to be desired. Case in point: The house we purchased only a year ago had appreciated on Zillow by about 50 percent by the time we moved in a few weeks later. If that were true I'd be the happiest man on earth. But I'm pleased it's 50 percent high and not 50 percent low.

The Wall Street Journal looked at the Zillow phenomenon and showed that, by and large, Zillow's "Zestimates" of a home's value are often surprisingly good: within a few percentage points of the actual price paid in a sale. But, as the story notes, "when Zillow is bad, it can be terrible—off the mark by more than 25% on one in 10 homes. In one case it was off by $2 million."

Still, I'm impressed that the median margin of error on a Zillow estimate is about 7.8 percent vs. the actual market value of a home. Estimating a home's value is incredibly difficult (as I recall when we sold our prior place), especially in a strange market like San Francisco. Realtors note that the more expensive a home gets, the less accurate Zillow tends to be. (Realtors also note: They hate Zillow.)

What's Zillow have to say about your casa? And how does that make you feel...