As you may or may not know, I emailed you guys a couple of weeks before you unveiled your product to suggest that you consult at least one real estate expert, before going public. I further suggested that since I have sold real estate in five states from coast to coast, that I might be able to help you tweak your product before its unveiling. I feel very badly that some are poking fun at your great real estate adventure, by coining the phrase “You’ve been ZILLOWED!”
Here are a couple of tips for you, (or for Dustin and Galen and Robbie) If you modify your application of data according to these guidelines, you will likely increase the reliability of your online Zestimate by as much as 50%.
Seattle area: Yes, you can value property fairly accurately using the tax data in the Seattle area. But the first step is to determine the appropriate factor. Many will value out at between 1.2 and 1.4 times the assessed value. Hot areas, like downtown Kirkland or parts of Queen Anne, etc will value at 1.5 to 1.6 times assessed value. Don’t take the comps out too far, keep your radius small. Stay as close to the subject property as possible and STOP when you have 5-8 comps after throwing out the High and the Low. DON’T average the sale price of the comps one to another to determine the value of the subject property. DON’T use price per square foot as a guide. Take each sale price and divide by THAT SAME PROPERTY’S assessed value to come up with the factor. If all of the properties in that neighborhood sold at 1.44 times assessed value, then your ZESTIMATE should be 1.44 times the assessed value of the subject property. You can average the factor, but not the price. Then use a range. Chuck the high and the low, the way I learned in grade school from the good Catholic sisters who taught me well.
Example: Data equals 1.8, 1.4, 1.42, 1.43, 1.44, 1.44, 1.45, 1.47, 1.1
Throw out 1.8 and 1.1. as the high is a massive remodel and the low is a fixer. Factor becomes 1.4357142. Assessed value of subject property is $313,000. Zestimate is $449,378.54 or between $438,200 and $460,110.
When inputting tax data, do not overlook the “effective year built”. Currently your program is not noticing that very important date, and reverting to the original year built, throwing the numbers way off on 80% remodels. You can use the 1.8 and 1.1 in the sample above by saying “Your home is valued at between $438,200 and $460,110. If you have just remodeled the interior, the price might be as high as $563,400 (1.8 X $313,000). If it is a fixer it may be as low as $344,300 (1.1 X $313,000).
For Seattle area, always use the assessed value of the subject property against the neighborhood factor.
Briefly, for Los Angeles beach areas: DO use price per square foot, as by and large that area does not have underground basements and the tax assessment increases to sale price every time a property sells (unlike Seattle and many other areas)
Florida: Do use price per square foot and keep the comps apples to apples. Watch the lakes. Price properties on lakes against other property on the lake and interior against interior. You are already OK in FL for the most part, so you can leave that alone.
PA, NJ and most of the Northeast of the country, keep the radius short and use price per square foot. Then find and apply the neighborhood factor and average the two answers.
Hope that helps you, Mr. Barton. Or maybe it will help Robbie and Galen come up with their own “Better than Zillow!”
Have a great sunny day in Seattle!