If you are looking into the valuation of your home before you sell it or if you want to get an idea of the value of a property you intend to purchase, you might be asking how accurate are Zoopla estimates.
Zoopla estimates are only as accurate as the data that drives the calculations, which is based on HM Land Registry, Royal Mail, Ordnance Survey and Registers of Scotland. But the data the estimates use is often out of date and estimated values aren’t correct as they don’t include property upgrades.
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I use two of my properties to demonstrate how Zoopla estimates are not accurate. For example, my Leeds property is overvalued by at least 22% and my Torquay property is undervalued by 32.7% (see below). If you take nothing else from this article, it is to know that the accuracy of Zoopla estimates should be taken with a large pinch of salt.
How Zoopla estimates
Zoopla uses data from a number of sources to provide estimates on over 26 million properties in the UK, and includes:
- HM Land Registry.
- Royal Mail.
- Ordnance Survey.
- Registers of Scotland.
The data used by Zoopla estimates includes:
- Previously sold prices of the property.
- When the property was last sold.
- Changes in the market value of similar properties sold nearby.
- Property features, including the number of bedrooms and bathrooms.
- Local area information such as schools and crime rates.
Zoopla estimates do not include
Zoopla estimates do not include any extra work that has been done to the property which has yet to be recorded. This includes property extensions, extra rooms, land additions* and property makeovers and renovations.
The data on Zoopla is updated every month, where the exact date depends on the source. Zoopla say that their estimate is a guide only and that it should not be used in place of a valuation by an estate agent. Zoopla also note that an estate agent can view your property and consider factors not included in their data to give a more accurate price.
* I’ve put an asterisk next to “Land Additions“, as I’ve purchased an extra 1.5 acres of land behind my own property since I purchased it. Of course, Zoopla doesn’t know about this land addition, which means its estimate of the price of my property is totally inaccurate.
Why Zoopla estimates are not accurate
- Excluded information: Zoopla data does not include property extensions, extra rooms, land additions and property makeovers and renovations.
- Data sources are out of date: Data sources such as Land Registry are not up to date and the information fed through to Zoopla estimates can sometimes lag by many months. This could mean in a fast moving market, the property values shown on Zoopla are not up to date with current property market trends.
- Not a formal valuation from an estate agent or valuer: Zoopla’s own FAQs section explains what the estimate isn’t, which is that it isn’t the same as a formal house valuation from an estate agent or surveyor.
- Calculation includes asking prices: Zoopla house price estimate uses the asking prices of similar properties, which is not the same as the sold price of property. Which means the estimate may be biased if asking prices are significantly above what is being accepted by vendors.
- Different property styles on the street: Zoopla takes an average of all nearby properties, which can include all different property types, ages and designs, which is not going to be a true representation of the price for each property. For example, Zoopla will often mistake a house for a flat on a street full of flats, and value it as such.
- No recent sold prices: If there are no comparable sold prices in the nearby area or street, Zoopla’s estimates are bound to be wrong. For example, we had this problem when we recently remortgage a property to find sold comparables for the valuer. The same will be true for Zoopla, but at least a valuer can use their grey matter to update their value estimate, whereas Zoopla’s estimate is based on a machine calculation.
- Lack of buyer feedback: Estate agents will value properties dynamically, which will be based on what is happening in the market at the time. For example, if competition is strong for say 3-bedroom houses in an area, they may begin to raise the price for new instructions of 3-bed houses to take account of increased competition. Whereas Zoopla will not take account of these types of changes until the information is updated on their database, which may be some weeks or months later.
- Examples below are wrong: The examples used below are Zoopla’s estimates of two of my own investment properties, which I know have the wrong estimated prices. One property is overvalued whereas the other is undervalued. The flat in Leeds wouldn’t even be worth more than £200,000, let alone valued at £244,000 (see below). Whereas the property I own in Torquay has an estimated price of £303,000 vs our recent mortgage valuation of £450,000, meaning it is undervalued by at least £147,000 (see below).
How to understand Zoopla estimates
In the following image you will notice the highlight numbers in the red rectangle. There are three numbers in this rectangle, as follows:
- Low estimated price – £219,000.
- Estimate price – £244,000.
- High estimate price – £268,000.
The estimated price of £244,000 is a simple average of the high and low prices, i.e. (£219,000 + £268,000)/2 = £243,500, rounded to the nearest £1,000 is £244,000.
You will also notice the green rectangle, which is Zoopla’s estimate of the price increase for this property in Leeds.
Are Zoopla estimates too high?
Some of the Zoopla estimates are too high, with one example showing that a property is overvalued on Zoopla by over £44,000 or 22%.
How wrong are Zoopla estimates?
Another property I own, which in this case is in Torquay, I know Zoopla has the value wrong. In the image below the estimated price on Zoopla is £303,000, but this valuation doesn’t take account of the extensive work we’ve done to the property.
We have just had this Torquay property valued in order to remortgage it to pay off the bridging finance, and it has been valued at £450,000. This means the Zoopla estimated price is inaccurate by at least £147,000, which is 32.7% wrong in this example. I say “at least“, as the property was valued by a surveyor for mortgage purposes, who tend to be conservative.
Are Zoopla estimates too low?
Some of the Zoopla estimates are too low, with one example showing that a property is undervalued on Zoopla by over £147,000 or 32.7%.
Why use Zoopla estimates?
Zoopla estimates are designed to help sellers decide the asking price before selling their home, and to help buyers decide what they could offer on a home they want to buy. The Zoopla house price estimate is their calculation of what a property could be worth, but is not necessarily its true value.
Can Zoopla estimates be use to negotiate?
Some people may use Zoopla valuations as a negotiation tool, but unless the seller is unaware of how inaccurate the Zoopla estimates can be, it is unlikely to be of any use.
Are Zoopla valuations rubbish?
It’s might seem a bit harsh to say that Zoopla valuations are rubbish, but with two examples from two properties that show valuation discrepancies of 22% overvalued and 32.7% undervalued, you could argue that rubbish is the right way to describe the information provided by Zoopla.
Final thoughts about how accurate are Zoopla estimates
It is okay to use Zoopla estimates as a guide to property values, but you are far better to find property sales comparables instead. If you want to learn more about how to research property values in your area before selling or buying property, please take a read of this article: Property Sales Comparables: What It Means. This article includes 16 comparable factors to consider when researching property values.
What can happen is that Zoopla estimates can give sellers false hope that their property is worth more than it is. It is only when an estate agent visits to carry out a true valuation when reality hits home. I’d love to believe the Zoopla estimate of my property in Leeds is correct, but I’m a realist.
If you are a homeowner looking into how accurate Zoopla estimates are, make sure you don’t start to overinflate the value of your house in your head. This could lead to disappointment when you come to sell.
The Zoopla estimate can also work against homeowners, as some buyers rely on the estimates and if the estimated price on Zoopla is lower than its true value, this may lead to cheeky offers being made. But any savvy homeowner will know the Zoopla estimate is no an accurate valuation of their home.
The thing is, Zoopla estimates can be right or close to the real value, but unless you know the local market you won’t know whether it is right or wrong. But if you know the market you probably wouldn’t be using Zoopla estimates in any event.
To finished off on the subject of how accurate are Zoopla estimates, if you think they are correct because an estate agent recently valued your house and it agreed with Zoopla’s estimate price, even a ‘stopped‘ clock will be right twice a day.
Please don’t forget to read this before you leave…
Please don’t forget to also read this article to discover how you could save £71,475 on your next mortgage if you sell your house and rent before buying again. As I said earlier, even I was amazed when I did the calculations! Learn about how you will reduce the stress of moving house, whilst at the same time potentially save thousands in the process!
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