I had a good laugh recently when reading Kris Berg’s San Diego real estate blog as she discussed “Zestimates”. “Zestimates” are generated on the web site Zillow.com which has become one of the top-tier real estate web sites in the country. Zillow.com basically takes the MLS data, and then creates an exciting set of graphs and charts that people are eager to consult, plus they have relevant advertising targeted to their demographic.
The “Zestimate” is an estimate of a home’s value using tax record data, mixes it with recent comparable public sales data and a little special sauce to give consumers an accurate price target for each property, even those not currently for sale. It is not an appraisal, but a guide using a new-age Value Range approach.
Great charts and walk-ability scores
Honestly, the site is very impressive with charts, links to additional sites, a satellite picture, and the “Zestimate” like I have discussed before. It is also so entrenched that “Zestimates” even show up on consumer trusted sites like Redfin.com or local newspaper real estate reports as a trusted source.
Darn it, if they trust them then it’s gotta be accurate. Finally the home buying consumer has real transparency when making decisions.
But what happens when the “Zestimate” is wrong? I sometimes contribute to Zillow.com to answer consumer questions, free, and the most common question that I see is “the Zestimate on my house is wrong. How do I change it?” So far, I have stuck up for the site citing the old “garbage-in, garage-out” saying and that, through time, the figures will become more accurate and not have Median Error rates of 13%.
I do my listing agent homework too, and when I went to check on a Fairfax, VA home for sale recently, the “Zestimate” came back at a price $488,000 below the asking price.
Say what?
When I went to the little map box on the Zillow.com listing and actually clicked on the property, then a brand new “Zestimate” popped up using the Value-Range pricing method with a price of $824,000 (which is low, but more like it) for the property. And you will need to click on the “Bird’s-Eye view” to actually see the property that is being offered for sale.
My conclusion is that Zillow.com has paired up the wrong tax record (their annual tax figure was incorrect) and, as a result, their top-line “Zestimate” is completely wrong.
Really, it’s free marketing so I’ll take it!
Am I complaining? No, because I want this home to be seen by anyone who is in the Fairfax, VA real estate market (a good thing) and I am spending time examining how my listing is being marketed because I know that today’s consumer pays attention to sites like Zillow.com, Trulia.com or any of the other sites that cross promote each other’s facts, figures and “Zestimates”.
As a full-time, boots on the ground real estate professional looking out for his client, I am willing to drill-down and see where information becomes murky for consumers who click through in 0.0375 Google-seconds if they don’t like a home listed on a web site.
Ultimately, when this property sells then there will be a new public record for Zillow to index and hopefully the record will be set straight once and for all.
Related articles
- Will Your Real Estate Offer Make the Cut? (dougfrancis.com)
- How to Get Your Home Ready to Sell in 30 Days (dougfrancis.com)
- Some Home Selling Tips for 2011 (dougfrancis.com)
Doug, Gracias for the mention!
You said:
>The “Zestimate” is an estimate of a home’s value using tax record data, mixes it with recent comparable public sales data and a little special sauce to give consumers an accurate price target for each property, even those not currently for sale.
That’s my emphasis added. My two cents — Zestimates are anything but accurate, and Zillow admits as much. Unfortunately, they admit this in very small print and most consumers miss the memo.
.-= Kris Berg´s last blog ..California home buyer tax credits. Blink and you may miss them. =-.
Doug,
After seeing your comment on my site and catching the title of this post (Zestimates being whimsical? I have to see this!), I thought I’d stop on in.
Zestimates are a funny thing (perhaps even whimsical). I get the same questions a lot, but Zillow isn’t quite as popular here in San Antonio as it was in other places I’ve lived. The key here is that Texas is a non-disclosure state. Without disclosure of sales prices, you can imagine what happens with Zillow’s data.
I will give Zillow credit, they do get it much closer than I would suspect for not having the all important sale data, but it’s still a roll of the dice from what I see. I’m not sure how their algorithm functions, but I do believe they put more weight on the county’s tax assessed value, which can vary so widely. Doing some research yesterday in our MLS I found two very comparable homes in the same neighborhood – tax assessed value difference between the two? Over $100K. While I expected to see some difference in the two values, I wasn’t prepared for that large of a gap.
Kris’ note about the small print is noted as well. In a world where we have to disclose everything, small print should be banned forever.
Doug,
Feel free to erase this comment. Just noticed that if you don’t add “http://” to the website field, CommLuv doesn’t pull up any posts. However, WP adds “http://” to the link. I never noticed that before. Now I have to go do a bit of testing on my site.
PS What CAPTCHA plugin is it that you’re using?
.-= Matt Stigliano´s last blog ..Question: Should I work with a Realtor® when building a new home? =-.
You would think that having Zillow aware of the problem would give them incentive to fix it but no they just keep telling my clients they are over paying for a house and I have to keep telling them Zillow isn’t as accurate as it should be. But you are right on the listing side. Having someone see the home for 0.0375 seconds is better than nothing.
Liz Benitez´s last [type] ..Ham Florentine Wreath