Understanding “The Zestimate” (Video)
By: Sara Bonert, Director of Broker Relations | May 19, 2009
When I talk with people about Zillow, the first question that usually comes up is the Zestimate. How do you come up with this number? Can it be changed? How accurate is it?
Even though we’ve addressed questions about the Zestimate on our blog in the past, we are now pleased to offer a short video, explaining the Zestimate. Actually, we created two separate videos about the Zestimate - one geared for real estate pros and one for the general site user.
If you find this helpful, please forward this post and these videos to anyone who you think would benefit. Or, this video can be a great subject to discuss at your next real estate meeting!
Video for real estate professionals:
Video for the general public:
- Stumble it!
- Categories: Zestimate, Zillow
Comments
74 Comments so far
Enjoy this post? Subscribe to the Zillow Blog feed or get updates via e-mail
Charlie Kentnor on May 26, 2009 11:15 am
I think the problem we notice most with the Zestimate, is that it does not take into account information that is on a listing, but lacking in the assessor’s records. For example, a property could have been purchased and updated and then put back on the market. Pertainant information is in a listing, but not in the assessor’s record. Similarly, a heated, but unfinished basement would show in the total square footage in an assessor’s record, but would have a different value than if it were finished. Again, that info is in a listing. I don’t know how you automate that, but it would be very helpful.
Randy Schumaker on May 26, 2009 11:20 am
This is great information. Sara–thanks for putting together the video.
Dave Richards on May 26, 2009 12:20 pm
I think now (more than ever), a “zestimate” is a useful tool to set an estimate on value. This is due to the fact that upgrades and improvements on a property add very little, if any, to a property’s value in a declining market.
However, if Zillow wants their zestimates to be viewed as a reliable source for value assessment in a broad market, they will need to create a process for assessing the value of improvements and condition on homes. This is not a task that can easily be automated since the value of a given improvement may vary greatly from city to city and even neighborhood to neighborhood. Zillow may consider establishing a team of local experts to determine the dollar value to be added or deducted on a given property based on conditon and enhancements. In a seller’s market, similiar homes can vary as much as 50% in sale price due to factors outside of location, square footage and lot size.
Joe the Realtor on May 26, 2009 1:05 pm
The video keeps saying it’s an estimate and you can’t count on it to be accurate, yet your selling to people as a tool to help them estimate the value of a home. What scares me the most is that banks are now relying on the estimates given by Zillow to come up with a value to justify whether or not to lend. Appraisers have a hard time doing appraisals in Miami Springs (my area of business). They need to really do their foot work to be able to justify values. Every house is different and has different pros and cons depending on a myriad of variables. Zillow is completely unable to come up with anything resembling the real value of a home here.
Sara Bonert on May 26, 2009 1:09 pm
Charlie- We somewhat automate this. Say a record on Zillow says a home is a 2br/2ba (according to public records). Then a Realtor posts a property for sale on Zillow (either manually or thru a feed) and tells us the home is a 3br/3ba. The Realtor information will override the country records and the Zestimate would recalculate based on this information. We update the Zestimates on the three times a week. So if the sq ft changes, as in your example, it would be accounted for in the Zestimate if the home gets listed on Zillow.
Sara Bonert on May 26, 2009 1:15 pm
Dave- You are right that this would be great information and you are right that it isn’t easily done. One things we do let owners do is ‘claim their home’ and add information like this to create an ‘owner’s estimate’. Information that the owner gives us doesn’t directly factor into the Zestimate, but we do allow the owner to publish this number along side our number.
Richie Naggar Broker on May 26, 2009 1:17 pm
Lets see here. We have the bank, the buyer, the seller, the agent and the appraiser all giving their opinions on what they think the value is. So, if it is not already complex enough, Zillow comes along and offers still another opinion. I am sure Zillow means well, but good intentions and opinions sometimes do not address the problem or offer tangible solutions. We need people who know and in my book, that is the agent who works that area. At the end of the day, he can carry on a meaningful dialogue with anyone who inquires. Look for that agent for answers.
Daniel Bates on May 26, 2009 1:38 pm
zestimate works best in cookie cutter neighborhoods where property values are relatively close and differences can be measured quantitatively (i.e. # of bedrooms or square feet). My biggest pet peeve about the zestimate is total ignorance of land value. From my experience, it assumes that value of a home on a 1/4 acre lot must be the same as a similar home that sells on a 100 acre tract next to it. It also obviously has no knowledge of home conditions. If a home in disrepair sells for cheap it lowers the property values of all homes.
J. Flagg on May 26, 2009 1:46 pm
The biggest problem is that too many internet home buyers want to fnd a concrete property valuation and you are providing a “Zestimate”. It is nice in theory and I am certain that it is a big part of Zillow’s market strategy, but Real Estate is not comprised of cookie-cutter product.
You can develop trends and you can generate multiple reports based on public record information. When you then want to attch the data to specific property valuations your home buying public is being mislead.
Unless you are going to invest the time and capital to have all the informaton that is pertinant to a homes value your developed number is worthless. View, interior finishes, exterior amenities, neighborhood, school, location, location and location hold significant valuational factors. You are leaving these factors out.
As a Real Estate professional, I have experienced buyers with their Zestimate printout in hand. They are under the impression that the Zestimate is the property value. My market is seeing multiple offers on homes in the entry level price range. Zestimate valued offers are not getting the property. I have strongly advised clients with “Zillow is the last word in valuation” attitudes that if the object is to purchase the home, the offer should reflect what they feel it is worth to them.
The entry level buyer is the most vulnerable and should be advised that the Zestimate does not take into account many factors that would make the property value different from the Zestimate. Give the buyer as much knowledge as possible and educate them as to what to expect from an Agent who works for them.
Ed Bisquera on May 26, 2009 2:10 pm
I don’t know if any site, Realtor, appraiser, “professional” etc, could really truly give an accurate value or estimate on a home, that would satisfy everyone involved. Also, the word estimate is thrown around like it really means an exact amount or something, but not many actually look it up in a dictionary. “estimate” is an approximation and too many buyers fail to use the definition clearly.
Anyway, I like the videos and Zillow’s best explanation on Zestimate’s and how they come up with it. All these valuation sites aren’t going away soon, so IMHO, the best thing to do, is to work with a site, that is willing to work with local Realtor pros, homeowners and others, to help in creating the best value range and Zestimate for the property.
Thanks for at least providing some commentary and videos we can check out.
Ed Bisquera
Follow me on Twitter @edbisquera
scott dixon on May 26, 2009 2:49 pm
Sara, you did a really nice job with the video. I found it useful and informative. Thanks
Ron on May 26, 2009 3:02 pm
I have noticed that zillow rarely if ever provides a
zestimate for multi unit properties, such as 2-4 units. I just wanted to know why, and if they ever will?
Milt on May 26, 2009 5:24 pm
I think although zillow indicates that an owner can update the information regarding upgrades, it does not include the additional information in the zestimate which does nothing to change the number. Most people look at only the number but not all the verbiage that might be printed alongside. If the zestimate is updated at least 3 times a week does it carry the owners or listing adjustments with it?
John on May 26, 2009 6:10 pm
Sarah, fist did the title on your video have a different last name, then the name you gave at the end? Anyway, you did a great job with the video. If people can understand that it is a rough estimate that Zillow is giving. We would be a lot better off. I did you explained that in the video, it is just hard to get buyers and sellers to understand this.
Marc (Appraiser) on May 26, 2009 8:27 pm
The first method you use to judge to accuracy of your zestimates (by comparing actual sale prices to zestimates at the time of sale) is not sound. If every sale price was representative of “market value”, then you’d have a case. But in the real world, many sales involve special conditions, seller financing, or other factors that influence the price and cause it to not be representative of market value. What Zillow is doing is a very nice try, but there’s no substitute for an expert opinion of value (an appraisal). Getting an accurate opinion of value is difficult for a human, and impossible for a computer (at this point).
Caroline Seamans on May 27, 2009 7:01 am
I am appalled at the estimates you come up with and the fact that the public has begun to rely on them. I work in a typical New England town with lots of different types of houses in each neighborhood. Just for grins I tried out your valuations on my own house. You compare it to everything within a radius with no regard for neighborhood assessing factors readily available on the field cards and with no regard for zoning differentiation. As a REALTOR I am not particularly happy when tech reliant people are quoting me misinformation that they have obtained via your site. I feel this is a destructive part of our current market. If you can’t get it right then perhaps you shouldn’t do it at all.
Tony Fontana on May 27, 2009 7:26 am
The explanations of the Zestimate are excellent. Real Estate agents/brokers and appraisers should be concerned…very concerned. I find the Zestimate more reliable than most appraisers. As explained the Zestimate uses multiple sources of real data, without personal opinion. Most appraisers look no farther than the MLS database, missing or eliminating all private sales. When I do use an appraiser that really knows how to appraise, I find his appraisals within 5% of the Zestimate. I look forward to the continuing accuracy improvements to the Zestimates and to the day when this becomes the standard for valuing real estate.
Charles Singer on May 27, 2009 10:57 am
I have 2 properties one in Florida and one in Tenn. Both have been upgraded over the years and no reflection.
The one in Tenn has decreased in value by Zillow over the last year but my next door neighbors value has not. I don’t understand this. After buying this home two years ago, over $20K improvements have been made and listed and my neighbor has done nothing. Zillow decreased the value of my property $20K and my neighbors value remained constant. Go Figure!!!!
Knut Torvik on May 27, 2009 1:24 pm
The Zestimate concept is great for what it is, namely an estimate of a particular property. Nothing more than that. It is unrealistic to think that Zillow will be able to account for physical particulars to any property. Also, it definitely works better when you have a large population base and a somewhat cookie cutter type neighborhood. I sold my house in Houston last summer and the Zestimate was right on to the sales price. I now live in a smaller community in Oregon and due to the small population of properties traded here I have less confidence in the accuracy of the Zestimate in this particular market.
Cyndy Hallam on May 27, 2009 6:03 pm
Hello, The information was helful. However I have 1.69 acres with 26 trees and a beautiful lawn. Very nice well kept home.I have may new additions to my home including a new roof. However my next door neighbor has one acre, there is no house on it and it is full of old cars and alot of junk. However the zestimate shows it about $40,000 more than my home!
What happened here?
ChadG on June 5, 2009 6:49 pm
As an agent the Zestimate is very annoying. I have seen this number accurate on one home but more than 20% on others. It can be very misleading and consumers don’t understand how to qualify when this number is correct or way off due to mis information.
Barbara on July 4, 2009 1:08 pm
Zillow appraisals are ridiculous, my home is barely reaching $ 300 K, my nieghbor who lives in a run down shack is at $ 412 K. Who comes up with these numbers ? I have over $ 100 K of solar on my house, none of the improvements are even taken in consideration. Zillow is a bust.
Barbara
Zane Rankin on August 9, 2009 8:31 am
It seems that the zestimates are close when comparing homes in a developement where all homes have similar size and value.
Zillow is dead wrong when it comes to one of kind homes. In my area zillow is consistenty out of touch with the value of homes and causes a problem when buyers come in and think that zillow actually knows what it is doing. Unfortunately zillow doesn’t.
Teresa Boardman on August 13, 2009 11:26 am
If the zestimate is not accurate why do you have a zestimate?
Lou Burns on August 13, 2009 11:31 am
I have been plagued in the past from clients who have gotten bad info from zestimates. In Texas, it is so inaccurate as to be criminal. TX privacy laws do not require selling prices to be published so Zillow has used the county values (usually 10% less than market) and god knows what other data. The only accurate estimate is to use a realtor who has the real-deal info from the MLS
Sheila Anderson on August 13, 2009 11:40 am
What scares me is that I did a deal with an agent and the appraisal came in $12,000 low. When I asked her why she listed the property at that price she said that she had gone to Zillow and that is what they came up with….Are agents going to stop doing their jobs by pricing the houses the correct way or listening to zillow?
Darin Persinger on August 13, 2009 11:42 am
i don’t see the big deal with the Zestimates being right or wrong. A seller could interview 3 different real estate agents and get 3 different prices. Does it make the job easier? Probably not, thus the frustration of much the Realtor community. I look at this as an opportunity for a Realtor to truly shine and show their knowledge and expertise to the home buyer and seller.
Mike Waling on August 13, 2009 11:51 am
I appreciate that Zillow has made a public attempt to explain how their product works. And, assuming its accurracy which I have no reason to beleive it’s not, it has led me to understand their product much better.
I also apprciate that they attempted to clarify for the consumer what a Zestimate is - and equally important - what it is not - and how there is a possibility that the information could be inaccurate.
I only wish that the video to the consumer would have said (more than once as it did in the real estate professional video) what the video said in the real estate professional video and that is: “This is a starting point.” “Talk to a real estate professional before making any major financial decision.”
There was never any direct statement to the consumer to talk to a real estate consumer on the comsumer video. In my old age, I listen to my tummy most of the time and it is saying that this comment was purposely left out. That’s disappointing to me because it would have helped us when that bring the Zestimate in hand saying it’s the gospel truth.
Thank you for sending this to me!
Mike
Spruce Creek on August 13, 2009 12:01 pm
We have found the Zillow Estimates to be inaccurate to the point of laughability and a source of jokes in our trade.
Their lack of local knowledge is the main reason for the inaccuracies, where a neighborhood only a block away but with prices 100% higher (per sq.ft.) than a neighboring area get bundled together as if there was a statistical relationship where there is absolutely none.
When statistics and mathematical models are used to create a prediction, the quality of the statistician is all important. Where there is no quality, the work product is just garbage. When the garbage is passed to a layman as truth, it becomes a tragic disservice to the public.
Sandy on August 13, 2009 12:13 pm
BOOTS ON THE GROUND!!!!
There is nothing that is better than seeing the property - be one an agent or appraiser (remember the days of ‘drive-by appraisals’?) and knowing the neighborhood or area. Don’t send me an appraiser from the other side of the state (have gone round and round with too many of them when they missed comps) and don’t try to take the asy route by only looking at what’s in the records.
As for “Zestimates” - well if every house in a neighborhood is exactly the same - then it might be aaccurate - otherwise it’s not useable information.
Lori Blank on August 13, 2009 12:17 pm
you are consistantly wrong in the community of Gold Canyon. None of the appraisers agree with you, and its easy to see why. Homes on golf courses or up against the Superstition mountain are valued with very low priced homes a few miles away. It has caused numerous problems and we now have buyers who have used your incorrect estimate to put in offers on homes only to lose out as the other offers were much higher and the property appraised 70 to 100K above your estimate.
you need to stop doing this, or at the very least consult with experts before proceeding. This is a very small unincorporated area with custom homes and communities close by some very low priced track housing.
We assume no responsibility for these offers and are now having our buyers sign a disclaimer when ignoring our advice and going by yours. You may be hearing from some very upset people.
Teresa Nelson on August 13, 2009 12:30 pm
I think this is a perfect time to remind home buyers & sellers that the internet is a great place to do homework. The same can be said of self diagnosing a medical condition. Ultimately a professional will need to be consulted for an expert diagnosis based on knowledge and experience. I am happy to see the Zillow recommendation to consult a Real Estate Professional to determine the actual market value.
Elizabeth on August 13, 2009 12:50 pm
Although I agree with the way zillow explains their process, the accessors records are not accurate many times. I know ours isn’t totally correct. Upgrades aren’t considered, as has been mentioned. Also, there are so many foreclosures being purchased at below retail prices that it is now dropping everyone’s values by lowering comps considerably. Though zillow can be a good overall indicator it is WAY FAR AND BELOW totally accurate. Even before the bbubble burst and foreclosures started running rampant zillow’s estimates were off by 5 - 20% from the appraisal values that owners paid for and received. If I found an appraiser who used zillow for a reference in the appraisal process I would not use that person personally.
Victoria Baker on August 13, 2009 1:04 pm
Sara thanks for putting this together. I will definitely share with the realtors of my company. So long as we’re armed with knowledge we’ll be better prepared in dealing with the public.
Bernie on August 13, 2009 1:09 pm
Thanks for the info. Sarah. One thing that caught my attention is that you use “For Sale” numbers in your Zestimate. This surprises me a great deal. I have always thought that the “For Sale” prices are out of line with reality. In fact, in my 15 years in this business I have seen so many over priced properties that never sell. As a result, these numbers set an inflated expectation with those who pay attention to them. I have constantly warned prospective sellers that they have to focus on the “SOLD” numbers to obtain any accuracy. I will start to believe your Zestimate numbers when you quit using these inflated figures.
Martha Beaudry on August 13, 2009 1:18 pm
Wow, this is very good. Thank you for putting it together.
Sara Bonert on August 13, 2009 1:29 pm
Bernie- Wanted to clarify, For Sale numbers are NOT used in the calculating of Zestimates. However, information we may learn about the house when it is reported for sale can be. For example, if public records says it is a 3 bedroom but the realtor says it is a 4 bedroom - basic home facts will be updated and cause the Zestimate to be recalculated.
Victoria - Exactly why the video is there. You can also forward the Zestimate Video for Consumers on to them - http://www.youtube.com/watch?v=uaeAgfay01o
Elizabeth - I hope appraisers, and lenders for that matter, aren’t using Zestimates for legal matters!
Lori- That’s interesting that you are doing that. Maybe you should direct people to the Consumer video as well, we were say this isn’t an appraisal. But I think consumers are doing this as a negiation tactic. I doubt they would be putting in offers based on what Zillow says if the Zestimate was more than the asking price…
Mike- Interesting feedback on the Consumer video. I think this is nothing more than style of the presenter. If the same person did both, the language would have been more consistent. Please note that the “starting point” language is used on our site, in the first paragraph of the Zestimate explanation.
Darin- I agree. A professional, knowledgeable real estate agent should be more creditable against a computer all day long.
Teresa- So that people have an anonymous, free, non threatening place to start. I would bet it actually drives more people to thinking about their real estate investment and actually reaching out to realtors.
Marty - Florida Lic RE Broker on August 13, 2009 1:57 pm
Buyers can’t digest or understand all the values the appraiser, realtor, seller, bank, etc give them on a house. They want a magic number and as much as you say this is not an absolute, I keep running across, “Zillow says…”. I found your number sometime to be too high, sometimes to be too low, and not enough ranging…which is truly what an estimate is. Afterall, the house is worth what the buyer is willing to pay…but the seller doesn’t have to accept it. As far as a seller or agent contacting you and providing more information, they are not interested in getting your site or any other any kind of accuracy where it can, obviously, work against them in the future. Since your z-mates do not and can not take into account the view, size of lot, new roof and many other factors that give a home an up or down value, I find your imposition of a house’s value via a computer formula fraught with inaccuracies and, frankly, dangerous for the consumer to use.
Thank you.
Jim Summers on August 13, 2009 2:16 pm
I am sure I’ve lost more than one able, willing and ready buyer due to the Zestimate. But, I still love the site and appreciate your efforts like the videos by Sara and Dave. Here’s some ideas for further accuracy: 1. Instead of a radius method for comparable property data, use census tracts combined with zoning, these factors usually describe neighborhoods very well - Real estate, like politics, is local. 2. Expand the area where owners can add amenities. 3. Don’t have short sales and foreclosure sales data equal to regular equity home sales, appraisers don’t. 4. Revise your accuracy data tables - the data from July-August 2008 was different than today’s. Keep improving!
Ann on August 13, 2009 2:18 pm
I wish Zestimate would simply remove the Zestimate. I’ve lost money on two sales now, thanks Zestimate being waaaayyy off in our area and for our property, even after we went in and updated it. No matter what professionals know, buyers come to the table with their “Zillow says it’s worth only…” fixed position from the ‘Zestimate”. Most recently in July, we received 3 offers and every one was same odd number and we couldn’t figure out where that number was coming from….we found out. Much to our chagrin, buyers were using the Zestimate, even though our updates and inputs were not being reflected on our zillow page. 3x/week? I’ve never seen that. Took you 3 months to update our page and that was AFTER the sale. I like zillow for any number of reasons for a variety of types of properties. The ZESTIMATE is not one of them and hurts a lot of folks in areas where you are NOT correct and given you are NOT keeping up with reflecting updates.
Bruce Weaver on August 13, 2009 2:24 pm
Zillo is a great tool. On my own home though the Zestimate was $30,000 above Appraised value. The true value of a home depends on what a buyer is willing to pay for it. I could ask the Zestimate price but I don’t know anyone who would be willing to pay it.
Sara Bonert on August 13, 2009 2:30 pm
Jim - 1. I’ll pass that along. 2. Owner’s can create an ‘owners estimate’ and post that all to the public site. Here they are welcome to talk about the kitchen upgrade, view, etc and assign it a value. 3. We don’t. 4. You’re right, we need to. Will circle back with engineers to get on it.
Ann - We update three times a week with any new info we get. When we get the info can vary from county to county. Some report new numbers every week, some once a year.
Ron Bell on August 13, 2009 2:31 pm
Zillow is the best thing to happen to Realtors because it is always so far off relying on historical stale data. The clients have no choice but to seek a professional opinion.
Thanks for bringing this prehistoric pricing model to the public and making it hard to find properties and cluttering the site with ads.
Lois Lequyea on August 13, 2009 2:34 pm
I claimed my house and updated the information to correct the public record on the size of house. The resulting zestimate was way too high, over $500K. I knew the price of a couple of nearby homes and put that information and the zestimate came down come. The zestimate showed that was that of the owner when all I did was update information. It was NOT my estimate. I find information altered. I just updated information again. Will be interesting to see what impact that has. There are many intangibles that I don’t see how you can assess. I think your zestimates need a disclaimer for those that come to your site to see what a home is worth. Too much stock is placed in your zestimates which may be right on some times but way off others due to information you do not have.
Ren Rieger on August 13, 2009 3:10 pm
I look at the Zestimate all the time. I feel that it is a helpful tool to have a quick look at the possible full market value of a property. I am aware that this is just a starting point. However, I very much appreciate all your work which goes into this.
What I do NOT appreciate is Zillow’s co-operation with http://www.foreclosure.com. This website advertises with dubious listings which are often completely out-of-date. I recently analyzed one specific area in the Los Angeles Metropolitan area (I used a one week free trial with http://www.foreclosure.com) and compared the data with http://www.ForeclosureRadar.com, RETRAN and County Records Research (the leading foreclosure information websites in Southern California), as well as the MLS. 50% (!!!) of the information concerning bank owned properties given on foreclosure.com were WRONG.
This association with foreclosure.com jeopardizes completely the good reputation Zillow was able to build up in recent years. I hope Zillow gets paid a lot of money for this “deal”.
Sandy Lanigan on August 13, 2009 3:55 pm
Will you kindly remove the statement that our house recently sold for $1.00 !!!!!! It was NEVER SOLD!
Thank you.
J. P. Schipani on August 13, 2009 4:04 pm
I will be listing my home for sale sometime within the next year. If I get one comment back from either a realtor or potential buyer that “Zillow says….”, I will proceed with legal action against your company. I am dead serious. What Zillow is doing to real estate is what “This Old House” did to building and remodeling. Idealism versus reality.
There are 3 homes directly across the street from me that are older and require major renovations to make them salable. In addition, my house is 15-20 years newer than those homes, the homes in questions are all raised ranches (which are not very popular in the Farmington Valley Area of Conn.), and in one case has furniture and other miscellaneous items stored on the front country porch!
Bob Harris on August 13, 2009 4:39 pm
greetings,
i am realator & in the process of getting a home on the market in saratoga, ca., 15315 bohlman rd. taking all things about the home into consideration, location, condition and current market i feel the sellers should be at a list price of $1,999,000. your site thinks the home is worth $2,221,500. the sellers think because you website claims $2,221,500 that is where the home should be listed. unfortunately i have had to explain to them that zillow in inaccurate because they don’t know the area or market place to get the home sold. zillow makes realtors lives difficult.
Pam on August 13, 2009 4:43 pm
Hi Sarah, perfect timing on this! I have my house on the market currently. I am a Broker in the area as well. The house next door to me just appraised last month for $619k,they refinanced and added a pool and landscaping. same builder same house except that mine has three full baths they have 2.5. My home was a complete renovation w/in the last 4 years theirs is NOT. they have a 1970’s kitchen..your zillow zestimate on my home, $517k!!! Impossible! I am disgusted with Zillow at this point.
Ken Waxlax on August 13, 2009 4:49 pm
Zestimate shows my property in Oregon is worth $1.3 million when it is actually worth about $250,000 ~ so I like that part.
For my California house, it’s only about $50k too low. I’m not convinced.
P J Smith on August 13, 2009 4:52 pm
My latest seller (short sale) said Zillow estimated her property at @$165K. County assessor just re-estimated at @$120K. My comps, based on very similar properties in 1-mile radius was $75K. You can see the problem/s . . .
Ted Mackel on August 13, 2009 5:13 pm
This is just like the difference between FAKOs and FICOs. Only MyFICO.com has real FICO scores. Offerings form places like Truecredit generate FAKOs. While the Truecredit score is completely unreliable for obtaining credit, it is a good snap shot and starting point to monitor your credit.
Zestimates don’t scare me or frustrate me. I understand how they work, where they are beneficial and I know how to coach my clients on their use.
LaDawn Menkemeller, EXIT Realty Metro - Dallas on August 13, 2009 5:14 pm
Foremost, Zillow.com is a welcomed tool with many terrific user friendly features benefiting buyers, sellers and Realtors. I adore this website!!
That being said, it concerns me that Zillow advertises, educates, informs consumers of the estimates with estimate ranges relating to property values stating publicly that these numbers are based on sales stats, tax rolls etc.
Even if a consumer did not live in a non-disclosure state (like Texas, where I do business)… these available numbers are more often than not HIGHLY inflated caused by sales numbers including Realtor fees AND Seller contributions with no consideration to the specific market conditions (what’s around it and what’s in the same subdivision: new construction, new construction foreclosures, pre-existing home foreclosures, pre-existing homes competing with all this and builder styles etc).
It’s a bad idea (if not entirely misleading) to put an “estimate” and an “estimate range” when it comes to VALUE without solid accurate information.
I realize it’s to be considered a “tool” for consumers…and that where hiring a seasoned Realtor comes in play…but a “range of subdivision pricing” is perhaps a smarter (and definitely a less liable) way of doing business for zillow being that consistent, accurate information is not available and therefore not being used to determine appropriate value to the general public.
Niki King on August 13, 2009 6:29 pm
I understand you position; however, I am noticing that my sellers in Los Angeles who are trying to do loan mods with their lenders and are up against putting their home for short sale once the lender declines them, have high hopes that they will be accepted on their loan mods since they BELIEVE the values that zillo is stating as a fact and not the sales price that Realtors list the home as. I am happy you put this video up so I can show my sellers that although accuracy is always sought after, nothing compares than a local analysis and hard data such as solds and pendings…
Fern Dumas on August 13, 2009 7:09 pm
ZILLOW IS A ZESTIMATOR and that spells garbage in dollar sense.
The Bank of America in certain areas decided to use Zillow rather than spend on qualified appraisers to qualify tentative borrowers. We have a property that was zillowed from $110,000 to $56,000 over a few months, we got turned down for $70,000 by Bank of America and the RBC who care not about Zillow loaned us $110,000. WE have the best of credit , but the point is we have the best of properties, on water access to The Gulf of Mexico
New windows, appliances, fixtures, completely renovated with $40,000 dollars of upgrades and Zillow’s ball parks figures make it a joke in our neck of the woods . They have Zestimated a delapidated trailer that should be condemned , priced at $90,000. They have a forclosed home which is totaled inside and with county infractions pending and demolition pending because there was no building permit and in contrevention or county code compliance listed at $245,000 . In My neck of the woods ZILLOW IS OUT TO LUNCH/
Zillow is providding a service that is detremental to good honest people. Dumb bankers poorly trained in
real estate and stuck with surplus inventory are trying to cut corners and save money and trusting Zillow as their Real Estate Guru
That is how I came to buy my second property , a Half million dollar home for $153,000 dollars. The certified appraiser confirmed that the lot alone with 270 feet waterfrontage going to the Gulf of Mexico , far exeeds the total purchase price.
The world is full of succers just waiting to be suckered in ,use Zillow to buy but not to sell
feel no remorse for the banks, just have compassion
for the victims who have no real estate savy
and trust what they see on their computers.
Bail out money must have compensated for the $400,000
dollar mortgage that was expunged when I became the new owner , SO ZILLOW THANKS AND NO THANKS , You ARE A DOUBLE EDGE SWORD
FLICKRPRO
Alan Trugman on August 13, 2009 7:34 pm
As a professional realtor with a background in market research (former Vice President of Marketing and Sales for Experian Consumer Research), I have a unique vantage point regarding the “accuracy” of Zillows estimates. All research estimates are as acccurate as the data and model used to produce the projections. Zillow operates within a “black box,” meaning there is no transparency regarding the data or the algorithm used to produce the estimate. In the world of research, this is highly suspect and you would be laughed out of most research directors offices with no methodology to review how the estimates are produced. But you are marketing directly to consumers and realtors, making the calculation that no one really needs to know how the so called “Zestimate” is calculated. As you can see from the comments of homeowners and realtors, you are not pulling the wool over anyones eyes who has the capacity to question. You try to cover yourselves by stating the “zestimate is a starting point,” but how lame is that? Consumers, if you want an estimate of your home’s value, hire a professional appraisor WHO IS FAMILIAR WITH YOUR LOCAL MARKET, or work with a professional realtor with the background to produce a comparable market analysis (CMA) for you based on comparable Title Transfers, Under Contracts and Active listings. If anyone would like more information, feel free to contact me through my website at http://www.alantrugman.randrealty.com
As always, Caveat Emptor!
P J Smith on August 13, 2009 7:56 pm
Amen, Alan Trugman! And ditto on hiring an appraiser who’s familiar with local neighborhoods and market conditions.
Fern Dumas on August 13, 2009 8:16 pm
I am quite pleased that Zillow did not infiltrate Canada Yet. However our banks work differently so I think Zillow will not have the impact it presently has in the USA.
I placed a make me move ad on Zillow with an abdominable price, and Bank Of America declined a home equity loan to my spouse because the house was listed for sale, what they failed to recognize the home was not listed for sale and further more it is not
flickrpro on August 13, 2009 8:40 pm
I am quite pleased that Zillow did not infiltrate Canada Yet. However our banks work differently so I think Zillow will not have the impact it presently has in the USA.
I placed a make me move ad on Zillow with an abdominable price, and Bank Of America declined a home equity loan to my spouse because the house was listed for sale, what they failed to recognize the home was not listed for sale and further more it is not registered to me.
The point in matter, if I claim my home, will the county and tax appraiser schedule their inspections based on Zillow Data ?
The Bank of America is guaging you through Zillows eyes and info , why would anyone not think that the counties and other corporate entities will not follow suite. It is no longer a case of buyer
beware…it’s …big brother is watching you !
I have observed Zillow for quite a while
and enjoy surfing and checking out Zestimates but
when Zillow becomes a real tangeable company impacting the real estate market, that is scary and serious and the reprecussions are monumental , both in the private sector and in the business world.
Why not just hand over the USA to Donald Trump ?
http://cottagenorth.com
For Sale Without Zillow !
ingrid y on August 13, 2009 9:55 pm
i think zestimate is powerful in changing the business model and imposes friction between real estate professionals and the buyer and seller. zillow can choose to spin this in many different ways to put a positive spin, but to be honest, real estate IS SUBJECTIVE, and i think this is not a very good product for the industry or the people that operate in it. it sets unrealistic expectations or unnecessary doubts from the consumer (buyer and seller) and puts the real professionals in a defensive spot. Ultimately, it makes it a lot harder for the professional to do their job. btw, it should not be a STARTNG POINT either… lol.
H Jeanette on August 14, 2009 5:13 am
I believe Zillow excels when providing factual data such as sold prices or current listing prices, however, because Zillow cannot walk into the house to see if it’s been updated from to bottom or will be a tear-down because the owner has neglected or injured it, the Zestimate is fatally flawed. I explain to my clients (I’m a RE Agent) that the Zestimate cannot preview homes as I do, does not talk with buyers as I do, doesn’t know where the outliers are as I do. I feel that in the end, Zillow invites itself to be discredited because agents need to refute the Zestimate with cold hard facts. I would encourage Zillow to keep what works and get rid of what doesn’t (the Zestimate).
Greg on August 14, 2009 9:30 am
The bottom line is that it does not help the real estate professional do their job. I confuses the public, puts us on the defensive (defending our CMA), and has to potential to create immediate distrust between the agent and the client. “But Zillow says………….
marelin on August 14, 2009 10:04 am
I love zillow.com. To all the people that complain that the zestimate is not accurate — I recommend that you look up the deffinition of estimate in the dictionary. It’s not called a zappraisial!
That said, I understand why real estate professionals do NOT love zillow. They will no longer be paid $30,000 for a job that the internet can do better. (Putting a potential buyer of a home in contact with potential sellers of a home.)
Don’t sell out to the real estate establishment. Long live the zestimate!
Bill Beteille on August 14, 2009 12:21 pm
Thank you very much for the video and accuracy chart.
I have wondered for some time now whether this Zestimate would help or hurt the real estate sales business in general and mine in particular.
I now think that it hurts in general and now after having the accuracy chart it may actually help mine in particular.
It hurts in general because it caters to the public misconception that it doesn’t matter what real estate agent you get they are only there to handle the paperwork and don’t really know what homes are worth. It offers people this absolute authority called Zestimate to argue against the real estate agent’s opinion of value.
It will help me to compete with my fellow real estate agents because I can get the customers they won’t because I have the tools and the know-how to combat the misconceptions perpetrated by the Zestimate. The accuracy chart is Zillow’s own admission that the Zestimate is likely bogus. It will help me to handle any objection to my determination of home values.
John Spadaro on August 14, 2009 2:18 pm
Zillow is nothing but artifical intelligence. Your site does not update itself like a true analysis site should. If marketwatch.com used your formula for values you would have investors jumping off the Golden Gate Bridge. I argee with most of my fellow Realtors comments and the appraisers comments. If you want your site to be of any value to anyone, get it fixed.
Oh, and one more thing, tell the banks that believe your values to call me. I have a bridge that links Brooklyn to Manhattan that I would like to sell them.
Oh, maybe appraisers should get together and for a Zillow like website and prove what real values are.
PS…. when will zillow put a disclaimer in bold letters that there information is based upon artifical intelligence and should not be used to justify the sales price of a home with out contacting a Realtor or an appraiser?????
Brian Eastman on August 17, 2009 1:07 pm
I just received an email this morning from a client stating that he was worried about what Zillow said a particular property was worth and thought it justified a low-ball offer that the seller would never accept in a million years. That is, IF he now even decides to submit one after being very high on the property during the showing and now soured by the info on Zillow. In my area, which is a medium sized city, people will typically pay a lot more to live on one side of a major thoroughfare than the other and there is a huge difference in the quality of the neighborhoods. In some areas, the difference between a “desirable” area and an “undesirable” area can be measured in a few city blocks.
I had to respond with yet another long email explaining that these are not appraisals, not based on the complete picture of home sales, and that Zillow doesn’t differentiate between the “good” side and the “lousy” side of the street.
For some reason, it seems as though people are more willing to place their trust in the opinion of a website 1000 miles removed from the local market than from the professional that works that market. I’m not sure you’re realizing how much faith home buyers and sellers are putting into the product. There definitely should be some kind of clear disclaimer directly below the zestimate. As for how much faith I put into it, it’s zero.
Understanding The Zestimate (Video) « Heather in the Real (Estate) World on August 17, 2009 3:05 pm
[...] Understanding The Zestimate (Video) This is an important thing to understand when looking for a home. Check it out. Understanding The Zestimate (Video) [...]
PURDY FERN on August 17, 2009 3:18 pm
ZILLOW is a very fun and enjoyable site to surf and Google Earth is also interesting.These Internet tools
are rather neat technological inovations for internet users.
The catastrophy comes into play when Zillow takes on the position of a KNOW IT ALL REAL ESTATE authority whith Zestimates that cross over into ESTIMARES and the appraisals and real property market values.
What is making this happen is bankers, realtors,sellers and buyers,internet surfers…
It will uplift some and devestate others and this will go on until ZILLOW is shown for what it really is and it is a farce in the real property appraised values based on accurate knowledge and facts that are much more complex than zillow’s ball park approach, shot in the dark from cyber space.
i explained this to one dumb banker, you can do the same unzillowfy your business reps etc…etc…
Alex Beck on August 18, 2009 4:38 pm
The Zestimate if totally inaccurate. My house and my neighbors house are INDENTICAL and they have a difference in price of $100,000. And when I say identical I mean identical. Our homes are assessed almost exactly the same and our taxes are very close as well. So there is no reason for this difference. AT one time there was only a small difference but something changed. So I wrote them and they did not respond. So I know for a fact they are inaccurate.
flickrpro on August 18, 2009 7:24 pm
Zillow
join my group The BIg ZERO
It is group z at flickr
http://flickr.com/groups/z
You are much more into photography than Real Estate
We have so much in common !
Z , ZILLOW ,ZERO…
Zestimates and photography do not require a license
you will feel right at home , we have no rules
Zillow’s Home Valuation “Zestimate” « Naperville Real Estate Video Blog on September 21, 2009 10:05 am
[...] http://www.zillow.com/blog/understanding-the-zestimate-video/2009/05/19/?scid=emm-2007147ReProZestAc... [...]
T. Pastor on October 27, 2009 4:51 pm
We live in the “estate” section of our neighborhood for which we paid a premium yet your zestimates value homes that are on the main thoroughfare of this community higher than ours. What’s the deal?
flickrpro on October 27, 2009 5:46 pm
Zillow is the worst thing on the Internet for the Sellers and Buyers and Banks. It is a detriment to real estate in America. And if a class action ensued I would find it appropriate. We were refused a home equity loan from Bank of America because of Zillow.
Here is a small overview of what Zillow lacks:
5610 0akview Punta Gorda Florida-33950 $252K
now on market for $65k and no takers yet-County infraction ordinances to the tune of $20k,the house is trashed needs new roof..etc
Zillow was a fun thing, now it is causing serious trouble for people in a bad economy and already hurting.Zillow should be held acountable for its cahotic intrusion into Real Estate.
This is not sour grapes on my part,my properties are on water and Zillow will not impact what I want to do.
Zillow is only Zestimates but Zillow is more and more aggressive online and they crossed the fine lines which require professional training, appraisal skills, licensing. Zillow is seaking to have people participate on their website,with make me move and such things . I think zillow belongs in the second life virtual world http://secondlife.com/
Please get out of my neighbourhood as viewed from Google
What Am I doing here ?
It is the Real Estate Boards and consumers advocates who should be posting here.
remember Zillow , park it here= http://secondlife.com/
marelin on October 27, 2009 8:03 pm
I’ve just paid $530 for an “official appraisal” that is much further off than zillows “zestimate.”
For $530 my premium house was comped against two houses that were so trashed inside that they were CASH ONLY sales, as no lender would touch them at any price. The third “comp” was against a house that went very cheaply at a real estate auction held 75 miles away in a different county.
I wish BofA did use zillow, where the value of this house is much more acurate.
You would think that perhaps there were no “normal” transaction to use for comps, but that is not the case. Two weeks ago, less than 200 feet away, a similar house on a smaller lot sold for $135K, yet because of the very poor choices made by an incompetent appraiser I have an “official appraisal” of $85K. (Zillow.com at $121K is at least in the ballpark.)
Now my buyer will not be able to get the FHA loan he should be able to get.
My previous post: I love zillow.com.
To all the people that complain that the zestimate is not accurate — I recommend that you look up the deffinition of estimate in the dictionary. It’s not called a zappraisial!
That said, I understand why real estate professionals do NOT love zillow. They will no longer be paid $30,000 for a job that the internet can do better. (Putting a potential buyer of a home in contact with potential sellers of a home.)
Don’t sell out to the real estate establishment. Long live the zestimate!