I could argue for days about the accuracy of Zillow’s Zestimate®. And now that Zillow is buying Trulia for $3.5 billion dollars (Did they use the Zestimate® for this bloated price too?), I’m sure the Zestimate® conversation is going to heat up more than ever.
I am a real estate agent and pricing homes and real estate is at the core of what my partner and I do! Without proper pricing a gold-laden mansion could sit on the market for years, or a boarded up shack could sell in hours. PRICING A HOME IS EVERYTHING!
So yes, I do take it personally when Zillow values a home (automatically with a computer program, mind you) too low or too high and sellers or buyers believe that that automated valuation is more accurate than I am! But, I’m not writing this to defend myself. I’m writing this to give you the reader, cold hard facts!
Let’s play a game called Zestimate® or Guesstimate. The rules are simple, we will pull a recent sale of a home, give you Zillow’s current Zestimate®, then reveal the actual selling price! If the percentage spread is good (meaning not too far from what the actual sales price is), I will give credit to Zillow for a successful valuation, if not, I will condemn the website for its inaccuracy. That doesn’t sound too harsh, right? 🙂 So let’s get started:
1770 Ash Court, in Beaumont CA:
Actual Sale Price on 7/28/14: $193,000!
That’s over a 6% difference! More accurately: 6.22%
Survey Says! GUESSTIMATE – No, no Zillow. Bad Zillow!
Sorry, but a $12,000 difference is a big deal for a home that sold under 200k!
By the way, the agent originally priced the property at $196,000. I think they were more accurate.
38220 High Ridge Road, in Beaumont CA:
Actual Sale Price on 7/29/14: $295,000
That’s almost a nine percent difference! Or more accurately 8.81%!
Survey Says! GUESSTIMATE – Nope, I’m sorry Zillow. You are inncorrect!
Nine percent is A BIG SPREAD. Too big.
This time let’s move to a different city, like Yucaipa, California.
13561 Canyon View Drive, in Yucaipa CA:
Actual Sale Price on 7/28/14: $402,500
Survey Says! ZESTIMATE® – Congratulations, Zillow! You’re right! Let’s move to the bonus round!
I have to be fair here. That’s only a 4.72% difference, but think about this: had the seller sold their property for the $383,000 Zestimate®, they would have lost $19,000! Oh, and the listing price did start at $383,000, but I’m sure a bidding war ensued with buyers that knew the true value of the property and drove that price up!
OK, one more property:
This one will be fun, and I will explain why below:
414 E. Stuart Ave in Redlands, California
Actual Sale Price on 7/28/14: $120,000!!!!
Survey Says! GUESSTIMATE!!! – Nooo, I’m sorry Zillow. That is incorrect, but thanks for playing! (I wish I could put that “Wa Wa Waaaaaa” game show sound effect here!)
Wow. Over a 31.4% difference?! Are you kidding me? $55,000 difference on a low 100k house? But here’s the reason why the house sold for 120k – The house is a completely dilapidated, run-down property. In fact, in the description the agent even says, and I quote “What you see is what you get!”
This one made me smile 🙂
But how did Zillow get it so wrong?
How the hell is a computer program in Seattle, Washington (where Zillow is headquartered) supposed to know the condition of this house in Redlands, California? How is it supposed to know the condition of ANY house, ANYWHERE? Or a comparable house for that matter? It can’t. And until Zillow employs drones to peek into windows of houses across America, it won’t ever.
And I leave you with a quote from Zillow’s CEO Spencer Rascoff about the accuracy of Zillow’s Zestimate®:
Zillow’s Zestimate® has a 6.9 percent median error rate, and should be used as a starting point in determining a home’s value.
Well, I agree, Spencer Rascoff, the Zestimate® should be used as a STARTING POINT in determining a home’s value, but NOT as the ONLY determining factor, especially with a 7% median error rate. Do you think I believe that home sellers and buyers should avoid Zillow and the Zestimate®? No, of course I don’t! I believe the website can be used as a great tool in a real estate process, just as long as it’s not your only tool. But please remember when your professional real estate agent, REALTOR®, or real estate broker takes time and care to access your property, the comparables sales and other listings activity, conditions and local market trends, and comes to a valuation different from a computer calculation, it may be the computer program that is off, not your agent.