Profile picture for pkz.54

Why such a discrepancy between Zillow Zestimate and the price it actually sells for?

Example... homes in Bonney Lake Sky Island...
Zillow lists one at $338,000 - yet the home is for sale at $569,000 with a pending offer of that as well.   Why is this?
  • April 23 - Bonney Lake
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Answers (10)

Profile picture for blue screen exile
Or this one?
http://www.zillow.com/homedetails/8809-217th-Av-Ct-E-Buckley-WA-98321/2112270570_zpid/

Again, built 2013; but no tax data shown at all, as well as no "sold" price history.

But estimated at $447.8k, range (70% confidence interval) of $414k to $476k as it doesn't have the prior tax history before construction to confuse it.

No link to the county records data, so you would need to look it up on that site yourself.

For Pierce County, Zillow statistics for 4th quarter 2013 "sold" compared to prior estimate:
316.2K    Homes details pages
284.5K    Details pages with Zestimates
36.9%    sold within +/-5% of estimate
66.1%    sold within +/-10% of estimate
87.1%     sold within +/-20% of estimate
Half of the homes sold were within +/-7.2% of the estimate
Half of the homes sold were NOT within +/-7.2% of the estimate
  • May 08
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Profile picture for blue screen exile
This one?
http://www.zillow.com//homedetails/10208-177th-Ave-E-Bonney-Lake-WA-98391/102607515_zpid/

Built 2013, no sold record history; Tax records show 2831 sqft plus attached garage; but agent is claiming 3226 sqft.  Tax records show an assessed value of $127.4k and tax of $1628 for 2010; and an assessed value of $89.9k and tax of $1333 for 2012.   And an assessed value of $373.6k and tax of $5538 for 2014, which doesn't show up on Zillow "YET".

Tax numbers and sold prices are used for extrapolating things like finishes, features, fixtures, amenities....

You are looking at numbers estimating the prior structure, not the present structure.  It will eventually get updated... but the data needed is just not posted to that page yet.

Besides, it is a statistical method that produces close to a bell-shaped curve distribution from nominal present market value, similar to what you would see for grading in schools.  It is nothing surprising; Zillow does the analysis at the end of each fiscal quarter for how close the "sold" prices came to the prior estimates.  You can see the statistical distribution for the various counties in Washington for the 4th quarter 2013 on the page:
http://www.zillow.com/howto/DataCoverageZestimateAccuracyWA.htm

(The 1st quarter 2014 is not calculated yet and not posted yet).

Yes, it is extremely easy to get schools to issue straight A's to all students, and to get students to make absolutely no spelling errors, typing errors, nor math errors in any of their classes.... but it is not going to happen.  That is not what the American Economic system "wants", nor what parents "expect".
  • May 08
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Because the median price of homes in Bonney Lake is $274K, NOT $569K, so a home that is actually selling at that value is way outside the mean, meaning its a very special property - an outlyer. You will find better accuracy in conforming area near the mean value - the $274K home range. 
 
  • May 08
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I find it impressive how relatively accurate the zestimate is, but beware, it's just a computer making assumptions based on the limited information it has. I'm amazed that it's within an only 8% variation, on average. How cool is that!

Here's Zillow's definition on what the Zestimate is and I think their suggestion to get a local real estate agent or appraiser's opinion is spot on:

"The Zestimate® home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

  • Getting a comparative market analysis (CMA) from a real estate agent
  • Getting an appraisal from a professional appraiser
  • Visiting the house (whenever possible)"


If you are looking at a home in the great Durango, Colorado area or La Plata County call me and I'll be happy to give you a free estimate.
  • May 08
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Profile picture for Newman Mitrick Group
If a simple math equation could accurately determine a home's true market value our entire industry would cease to exist overnight.

a "zestimate" is at best an educated guess and a basic starting point to ascertaining value.  You should always consult with an experienced local agent to determine the value of your home.
  • May 08
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Yes when Zillow first launched the Zestimates it was really off. And now it is much better but it is a guess and a buyer is really the one who determines the price at which they are willing to purchase a certain property.
  • May 08
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Profile picture for Brian Hopper
I agree with Allison....Zillow has a great read on the infamous ZESTIMATES.  
I have seen some neighborhoods right on with market value, and some neighborhoods like Sky Island a bit off.
  • May 08
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Profile picture for blue screen exile
If the estimate is low, likely there were revisions, remodels, renovations and/or restorations since the prior purchase.  (Prior purchases are factored into the estimate calculations to capture views, amenities, features, fixtures, finishes....)

If the estimate is high, likely there is deferred maintenance or problematic neighbors.  About equal number high and low.  It closely follows a bell shaped distribution curve.... like you would see for grading in schools.
  • April 24
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The Zestimate is actually a number within a wide range of actual sales in the area. The range could cover up to $100,000 up or down on a property depending on which state/county you live in. By scrolling down to the bottom and clicking on the Zestimate link you can find out how accurate the Zestimate is for your area. Also just FYI, if you own a home and know that your Zestimate is low based on recent sales or updates that you've done, you have the ability to adjust your own Zestimate!
  • April 23
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Profile picture for 1AllisonSmith
I recommend that you scroll to the bottom of the zillow page and click on the "zestimate" link.  It will give you great information.
  • April 23
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