If I am selling my house and I change the listing price, why does it affect the Zestimate?

I have noticed that when a house is listed for sale at a high price, its Zestimate rises sharply.  By the same token, when the price is reduced, the Zestimate often goes down by virtually the same amount.  Given that some buyers look at the Zestimate as an estimate of the property value, this seems to encourage some sellers to list at a much higher price than they expect to sell for because they know the Zestimate will be high and give their house an artificially high value.
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April 28 2012 - Boca Raton
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Profile picture for Dunes ..
I know Surbiton and that's why you're a fool imo

Apologies Karina..
I'll flag mine and Surbiton's posts and hope they delete them

Apparently I can't flag mine so would someone please do it for me...
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April 29 2012
Profile picture for hpvanc
I agree with most of what Karina has said, and share her concern, since I have an inkling that Zillow is incorporating the list price of an individual property into the Zestimate of that property especially in areas with spotty data. 

While it is not pertinent to the Zestimate in particular, but to negotiating strategies in general, my 1st post merely pointed out portions of Karina's 4th post that I interpreted as gently chastising buyers from doing the exact same thing she admits an agent was attempting in her 3rd post.  Seems to be a double standard to say "In a recent transaction, the seller's agent distributed the Zestimate to influence buyers to increase their bids."  Followed up by "but those buyers may look at the falling Zestimate and only make low-ball offers and in fact refuse to bid above the Zestimate. So if even if the Listing Price is "realistic" the corresponding (lower) Zestimate may scare off buyers from making realistic offers."  Maybe I read it wrong, but it is exactly the kind of statement many consumers are remiss in guarding against when dealing with salespeople.
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April 29 2012
@Tug

I make NO apology for my rant against Zillows dysfuctional zestimate algorithm. The only reason I post here is to make my views clear about the fundamental flaws of zestimates, and intrinsic unfairness of how zillow treats any homeowner who questions the accuracy of an unwanted zestimate. My rants will continue until zillow resolve my complaint, and when they have taken 9 months and not even corrected the name of the city where they claim my home is, then the chances are I will be ranting on this forum for a long time to come.
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April 29 2012
Profile picture for Dunes ..
Surbiton can't you leave at least 1 thread/discussion asking a Serious and important question free of your Rant?

Cause that's all you contributed to this important question/concern..your Rant imo
(and no I'm not interested in another Rant about how until they you're
gonna)

People post things like this that basically support your position and you kill it, bury it, make it so people don't want to add to it, share their experience with your need to Blah Blah Blah..

Sometimes you are your own Enemy and that's just a Fact
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April 29 2012
This question is yet another example of how inaccurate and misleading zestimates are. It is a fact that zestimates go up when a home is listed and it is a fact that zestimates go down when the price is reduced. The zestimate algorithm is so fundamentally flawed the best thing zillow could do is dump it and and start again. Maybe even pay Core Logic to provide the information to them as they seem to have a much more professional approach and better accuracy than zillow could ever hope to achieve with its failed algorithm.

Should it matter to Zillow that they buy in the home value estimate? not really as they already buy in the transaction data from 3rd parties, and also pay substantial money to Core Logic as part of the patent infringement settlement agreed last December. Just eliminate the algorithm BS and use the finished product and still get the same advertising revenue, without having to pay for the 2nd rate garbage it computes and publishes now.
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April 29 2012
In my opinion when a house is currently listed for sale it doesn't seem fair to allow the listing price to affect the Zestimate.  I agree that after the sale is completed the sale price should impact the Zestimate but not while the house is still on the market.
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April 29 2012
I have also seen more examples where there seemed to be no correlation. But still, I wonder what then motivation for having anything tied to sell price?
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April 29 2012
I have seen some I thought were suspicious. I've considered that it might just be agents or sellers updating the specifics on the house, but I have seen some where that couldn't explain it.
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April 29 2012
Profile picture for Dunes ..
"What I am trying to confirm is that the Listing Price is a major factor in the Zestimate because Zillow's explanation of the Zestimate does not currently acknowledge that.  Buyers should be aware of that fact."

Good question and imo an important one
More important imo than using it for diversions into..Watch out for them Agents

Hope you get a response to your Question/Concern Karina because I agree with you no matter what the actual answer turns out to be ..
"Buyers should be aware"


Thumbs up for sharing and asking
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April 29 2012
Profile picture for hpvanc
I hope Zillow will respond on this one.  If there is a pattern of Zestimates jumping based on listing price, it is very disturbing, and calls into question considering the Zestimate a useful datapoint.

I hope that no one is basing offers or listings for that matter on a single questionable piece of valuation data, like the Zestimate or one CMA.  I think buyers will present any piece of data to accompany an offer that is in their self interest, if the Zestimate works for them they will use it if not they will find another one or submit without justification.

On a side note it is really a sad commentary that agents that present themselves as buyers agents are unable to understand the concept of buyers looking out for their best interest.  If they are going represent themselves as buyers agents, they have a fiduciary responsibility to do the look out for the buyers interest on pricing.  Not doing so calls into question the already questionable practice of people acting and being compensated on commission as a salesperson, contractually calling themselves fiduciary buyers representatives.  Buyer beware is true on every level.
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April 29 2012
@Richan81: Following from my previous response, sellers should also be aware that reducing the Listing Price towards a realistic Selling Price may have an unintended consequence.  Sure, you may get more interest from potential buyers, but those buyers may look at the falling Zestimate and only make low-ball offers and in fact refuse to bid above the Zestimate. So if even if the Listing Price is "realistic" the corresponding (lower) Zestimate may scare off buyers from making realistic offers.
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April 29 2012
@Richan81:  Your response assumes that the Listing Price is closely related to what the seller is actually willing to accept.  In most markets today, buyers make an offer that is well below the Listing Price, but their offer may be influenced by the Zestimate,  In a recent transaction, the seller's agent distributed the Zestimate to influence buyers to increase their bids. So the Zestimate tends to become a self-fulfilling prophecy.   What I am trying to confirm is that the Listing Price is a major factor in the Zestimate because Zillow's explanation of the Zestimate does not currently acknowledge that.  Buyers should be aware of that fact.
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April 29 2012
Profile picture for Rchan81
I've also noticed what Karina mentions and I agree that the Zestimate follows listing price pretty closely.  I would think this is because Zillow assumes a listing will be close to market value.  @Karina  - if people will create artificially high listings to boost the Zestimate then it just won't sell, not matter what the Zestimate is.  When the sale does take place, the Zestimate would then track the sale price.
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April 28 2012
2675 NW 29th Street, Boca Raton FL 33434.
Before listing for sale, Zestimate was $509K.
Listed for sale 3/19/12 at $539K ->  Zestimate dropped to $503K within 2 weeks.
Reduced LP to $524K on 4/4/12 -> Zestimate dropped to $486K within 2 weeks.  
It seems that the Zestimate on this house adjusts to 93% of current Listing Price within 2 weeks.


Smaller neighboring house 2776 NW 27th Av Boca Raton FL 33434
Before listing for sale, Zestimate was $405K
Listed for sale 4/16/12 at $567K -> Zestimate has increased to $426K in less than 2 weeks.
I think 2nd house was perhaps deliberately priced high to raise Zestimate and I expect the Zestimate to continue rising sharply over the next few weeks because there is a big discrepancy between the Zestimate before it was listed for sale and the Listing Price.

There are many other examples where the Zestimate moves sharply in response to the Listing Price.

BTW: The graph of historical Zestimates for a house does not accurately show day-by-day changes in the Zestimate; the data points on the graph are roughly two weeks apart whereas the actual Zestimates are updated every 3 days.
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April 28 2012
Profile picture for wetdawgs
That's an interesting observation, and shouldn't be happening by Zillow's definition of "What is a Zestimate?".  Would you care to provide some examples?

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April 28 2012
 
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