Comments on: The Accuracy of a Zillow Zestimate http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/ Seattle's Leading Resource for Real Estate Information Sat, 21 Nov 2009 06:01:18 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: ARDELL http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287465 ARDELL Tue, 18 Mar 2008 17:17:10 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287465 Q-Diddy, That answer is often more property specific. It depends on how many like kind sales there are in a given area. In a housing complex where five sales of the same model have sold within a six month timeframe, there would be very little difference. The agent version would have more of a "leaning". If the agent represents the seller, they would try to add value based on supply and demand and increase condition factors to support a higher than last one price. If the agent represents the buyer, they would try to hold closer to the comps and work more off of a "price per square foot" rationale. Zillow gives a range rather than tilt it toward "Who's Asking?". Appraisers will lean toward who hired them and why. Estate Valuation? Divorce Valuation? Refi? Purchase Loan? On a Purchase Loan often the downpayment will be a factor and an Appraiser, whose primary job is to protect the lender, will tilt differently at zero down than at 50% down, as the lender's exposure is the primary factor. Q-Diddy,

That answer is often more property specific. It depends on how many like kind sales there are in a given area.

In a housing complex where five sales of the same model have sold within a six month timeframe, there would be very little difference. The agent version would have more of a “leaning”. If the agent represents the seller, they would try to add value based on supply and demand and increase condition factors to support a higher than last one price. If the agent represents the buyer, they would try to hold closer to the comps and work more off of a “price per square foot” rationale.

Zillow gives a range rather than tilt it toward “Who’s Asking?”. Appraisers will lean toward who hired them and why. Estate Valuation? Divorce Valuation? Refi? Purchase Loan? On a Purchase Loan often the downpayment will be a factor and an Appraiser, whose primary job is to protect the lender, will tilt differently at zero down than at 50% down, as the lender’s exposure is the primary factor.

]]> By: Q-Diddy http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287437 Q-Diddy Tue, 18 Mar 2008 16:26:22 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287437 What's the differece between Zillow/Agent and an appraisal? What’s the differece between Zillow/Agent and an appraisal?

]]> By: Donna Hoffman http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287083 Donna Hoffman Tue, 18 Mar 2008 03:48:33 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-287083 In my opinion, the Zillow Zestimates are seriously flawed. Since Zillow doesn't reveal the algorithm for open scrutiny, we can't evaluate where the flaws are kicking in. That, in itself, is cause for concern. We've been following this over at the UCR Sloan Center for Internet Retailing, and so far, Zillow doesn't have a very good answer to the discrepancies. See for yourself: http://sloan.ucr.edu/2008/03/09/why-are-zillow-zestimates-so-wrong/ Professor Donna L. Hoffman UCR Sloan Center for Internet Retailing In my opinion, the Zillow Zestimates are seriously flawed. Since Zillow doesn’t reveal the algorithm for open scrutiny, we can’t evaluate where the flaws are kicking in. That, in itself, is cause for concern.

We’ve been following this over at the UCR Sloan Center for Internet Retailing, and so far, Zillow doesn’t have a very good answer to the discrepancies.

See for yourself: http://sloan.ucr.edu/2008/03/09/why-are-zillow-zestimates-so-wrong/

Professor Donna L. Hoffman
UCR Sloan Center for Internet Retailing

]]> By: ARDELL http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11311 ARDELL Tue, 15 Aug 2006 18:44:44 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11311 My experience has been that no one takes a Zillow Zestimate as "gospelish" and no one takes the agent's CMA value as "gospelish" either. Whether or not Zillow is accurate has to do with the "subject property" and the variance of value at Zillow can be the same if three professionals come in with three different values, as is often the case. To say that "professionals" are always "spot on", or are always accurate and more accurate than Zillow is not realistic either. Never say never or always :-) My experience has been that no one takes a Zillow Zestimate as “gospelish” and no one takes the agent’s CMA value as “gospelish” either.

Whether or not Zillow is accurate has to do with the “subject property” and the variance of value at Zillow can be the same if three professionals come in with three different values, as is often the case.

To say that “professionals” are always “spot on”, or are always accurate and more accurate than Zillow is not realistic either. Never say never or always :-)

]]> By: Thogek http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11310 Thogek Tue, 15 Aug 2006 18:23:07 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11310 No argument from me about the fact that a $20k/6% difference can be critical to the business of selling a house. But (IMO) anyone depending on a public automated tool such as Zillow for anything much more accurate than that deserves what they get. 6% variation is pretty good for an automated online tool like that (as they go), but a more consistant and precise valuation requires human attention, which Zillow's otherwise very interesting tool cannot provide. Of course, this doesn't help the professional whose client thinks Zestimates are gospelish, etc... My only point is that Zillow does pretty well for what it is, but that there seems to be a lot of mixed [mis]perception over what it actually is (perhaps not helped by Zillow's own fanfare). My musings above were toward what it would take to clarify this inherent inaccuracy to Zillow's users without necessarily killing the tools interesting consumer appeal. It is clearly not a professional property valuation service, and should not be used as such by anyone who cares about the success of buying/selling a home. Sorry if I was less than clear about that point. No argument from me about the fact that a $20k/6% difference can be critical to the business of selling a house. But (IMO) anyone depending on a public automated tool such as Zillow for anything much more accurate than that deserves what they get. 6% variation is pretty good for an automated online tool like that (as they go), but a more consistant and precise valuation requires human attention, which Zillow’s otherwise very interesting tool cannot provide.

Of course, this doesn’t help the professional whose client thinks Zestimates are gospelish, etc…

My only point is that Zillow does pretty well for what it is, but that there seems to be a lot of mixed [mis]perception over what it actually is (perhaps not helped by Zillow’s own fanfare). My musings above were toward what it would take to clarify this inherent inaccuracy to Zillow’s users without necessarily killing the tools interesting consumer appeal. It is clearly not a professional property valuation service, and should not be used as such by anyone who cares about the success of buying/selling a home. Sorry if I was less than clear about that point.

]]> By: ARDELL http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11118 ARDELL Fri, 11 Aug 2006 21:28:51 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11118 Thogek, The "whole effort over producing a tool like this" is about getting seller leads to the table vs. same old, same old, buyer leads. People look at the value of homes are OWNERS, most internet buyer leads, heretofore, or at least a higher percentage of them, are first time buyer, currently renters. "King of the Hill" will be the one that generates the most bona fide seller leads, and you don't get them by offering "A free market analysis of what your home is worth", as all too many agents know. Thogek,

The “whole effort over producing a tool like this” is about getting seller leads to the table vs. same old, same old, buyer leads. People look at the value of homes are OWNERS, most internet buyer leads, heretofore, or at least a higher percentage of them, are first time buyer, currently renters.

“King of the Hill” will be the one that generates the most bona fide seller leads, and you don’t get them by offering “A free market analysis of what your home is worth”, as all too many agents know.

]]> By: ARDELL http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11116 ARDELL Fri, 11 Aug 2006 21:15:54 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11116 Osman is right on. Last year this was not as critical. This year, and this time of year, there is little room for mistakes and you must evaluate your position every 10 days, not every 30. In January you can make every mistake in the book and use the 30, 60 90 rule and be right on by April 15 and do just fine. In August, you have to be right on by September 15th, so fine tuning must be much quicker at 10/10/10 vs. 30/60/90 with "out the gate" being more critical. I'm talking shorthand here...hopefully most of you are tuned into "Ardellspeak". Feel free to ask questions if I'm going too fast. Osman is right on. Last year this was not as critical. This year, and this time of year, there is little room for mistakes and you must evaluate your position every 10 days, not every 30.

In January you can make every mistake in the book and use the 30, 60 90 rule and be right on by April 15 and do just fine. In August, you have to be right on by September 15th, so fine tuning must be much quicker at 10/10/10 vs. 30/60/90 with “out the gate” being more critical.

I’m talking shorthand here…hopefully most of you are tuned into “Ardellspeak”. Feel free to ask questions if I’m going too fast.

]]> By: osman http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11113 osman Fri, 11 Aug 2006 21:00:40 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11113 The 20,000 that Zillow is off by falsely inflate sa seller's impression of what her house is worth. It may only be six percent, but as Ardell's latest post right points out, a small difference exists between a successful transaction and dead wood. In this kind of market, it's a critical mistake. The homes that are selling are doing so much faster than last year. Meanwhile, the ones that are not selling are sitting for much longer. Mispricing is probably the worst mistake you can make. The 20,000 that Zillow is off by falsely inflate sa seller’s impression of what her house is worth. It may only be six percent, but as Ardell’s latest post right points out, a small difference exists between a successful transaction and dead wood.

In this kind of market, it’s a critical mistake. The homes that are selling are doing so much faster than last year. Meanwhile, the ones that are not selling are sitting for much longer.

Mispricing is probably the worst mistake you can make.

]]> By: ARDELL http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11109 ARDELL Fri, 11 Aug 2006 20:26:06 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11109 Oh, oh...now everyone knows who was number one and who was number two in "Ardell's Fantasy Version". I always did like the older guys better. Oh, oh…now everyone knows who was number one and who was number two in “Ardell’s Fantasy Version”. I always did like the older guys better.

]]> By: Thogek http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11106 Thogek Fri, 11 Aug 2006 20:01:08 +0000 http://raincityguide.com/2006/08/09/the-accuracy-of-a-zillow-zestimate/#comment-11106 Osman said: "We just listed this 1,200 sqft house at $319,900... Zillow thinks it has only 792sqft and is valued at $339,087. Off by $20,000..." So Zillow value estimate is within 6% of Osman's careful professional evaluation. IMO, that's actually pretty good for an automated Web tool that's trying to project values based on limited information. Are valuations from professional to professional always as consistant? Of course, not all Zestimates are as accurate... and the sq.ft. value in the above example is pretty off... I'm just wondering... Would it be better in any sense if Zillow (or any similar tool) presented more prominent disclaimers/indicators of the expected error rates of their values -- or perhaps presented the values as +/-7% or so ranges, such as "$315,351 to $362,823", instead of a single exact-sounding price value? Or would Zillow be too concerned about not being taken as seriously if they present less-than-exact-looking values? Or is the whole effort over producing a tool like this more about making a splash and buzz over a cool new feature than about making that feature as good and usable to the consumer as possible? Just wondering... Oh, and Picard called his first officer "Number One", not "Number Two". ;-) Osman said:
“We just listed this 1,200 sqft house at $319,900… Zillow thinks it has only 792sqft and is valued at $339,087. Off by $20,000…”

So Zillow value estimate is within 6% of Osman’s careful professional evaluation. IMO, that’s actually pretty good for an automated Web tool that’s trying to project values based on limited information. Are valuations from professional to professional always as consistant?

Of course, not all Zestimates are as accurate… and the sq.ft. value in the above example is pretty off…

I’m just wondering… Would it be better in any sense if Zillow (or any similar tool) presented more prominent disclaimers/indicators of the expected error rates of their values — or perhaps presented the values as +/-7% or so ranges, such as “$315,351 to $362,823″, instead of a single exact-sounding price value?

Or would Zillow be too concerned about not being taken as seriously if they present less-than-exact-looking values?

Or is the whole effort over producing a tool like this more about making a splash and buzz over a cool new feature than about making that feature as good and usable to the consumer as possible?

Just wondering…

Oh, and Picard called his first officer “Number One”, not “Number Two”. ;-)

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