[photopress:CACDQF8P.gif,full,alignright] Actually this is kind of funny. Zillow says the whole town goes up (turquoise line) while Ardell’s house takes a nose dive (dark blue line).
Anyone have a clue as to how that happens?
Rain City Guide
Your Guide to the Seattle Real Estate Market
Oh…I’ve seen THAT HOUSE before…I would have to say it’s the occupants! 🙂 I hope you know I’m joking! I think you’re proving your point with regards to Zillow. When ever I ask a borrower what they think their home is worth, and I hear “Zillow says….”
Sorry, Ardell, when you lob ’em up there, I just can’t help myself. I hope you know I’m joking. 🙂
LOL, I only have two lists. Once you’re on the Good one, it’s really, really hard, almost impossible, to shift to the bad one. But I’ll let you know if you’rr starting to push it 🙂
Honestly, isn’t that the whackiest nose dive since 1/1/07 you’ve ever seen!! It looks like the Stock Market Crash of 29!
Maybe that was before we mowed the grass.
It doesn’t make any sense at all. I think I tried this with our old house and I think we had a similar graph. I’ll have to check it out again. You got my wheels going (as usual). 🙂 Could it be lack of sales comps for that time of year???
Someone call the Bubble People quick! Let them know the Bubble Burst, but only over my house.
I’m sending this to Drew and David…see if Zillow cares to pop in with an “explanation”.
Rhonda,
If it were just lack of comps, wouldn’t the other line go down too?
It probably has something to do with that conservation you had with those folks over at Zillow.
They decided to give you a comp area all by your lonesome. 😉
I do find a small amount of humor in someone freakin’ about a number they just a few minutes before claimed was worthless.
A house is only what someone is willing to pay for it, right?
er… conversation.
Talk about “picking on the wrong lady”.
Zillow’s checking into it as we speak…maybe I’ll get 1.3 mil to compensate for my anguish. This is a hoot.
Biliruben, I never said it was worthless. I think it is quite dangerous.
he he!
Come on. Dangerous?
It’s just an automated comp which they admit doesn’t take into account any of the details a prospective buyer would consider when deciding what he is willing to pay for your million dollar castle.
You think someone willing to drop near a million on a house in Kirkland wouldn’t be sophisticated enough to realize the value, or lack thereof, of an automated comp?
Maybe you should be careful answering that… 😉
The Kirkland data would be more of a wash since it’s an entire city and not just Casa Ardell. I’m assuming….
Your neighbor around the corner has a similar pattern, so it doesn’t look like a vendetta. Bought above their zestimate in 2005, their zestimate then spiked, probably because they take into account actual purchase price pretty heavily in the short-term, then it looks like they stopped weighting the actual purchase price as heavily after a time, and it slid back down.
This actually gives some interesting insight into the formula Zillow uses.
I’m going to keep this as an example of why you shouldn’t put too much stock in a Zestimate. Seriously, I have not been a “Zillow Basher”, but this is just too much.
“A house is only what someone is willing to pay for it, right?”
Biliruben, if you can find even one time I have said that, I”ll eat my hat. I think that’s the stupidist line in the real estate agent tool box. Which “someone” are the talking about?
Okay. I’m confused.
What’s a house worth (economically, not the intangibles), if it isn’t worth what someone’s willing to pay?
That appears to be how their appraised these days, at any rate.
Ardell – if you keep it as an example, you should show the 5 year trend line just to be fair. If it hadn’t spiked to you “overpaying” (from Zillow’s formula’s perspective), your house would be following the nice, smooth upward trend that the rest of Kirkland has experienced.
Biliruben,
I’ll do an online CMA and show how fair market value is estimated and then fine tuned and achieved. Gotta run now though.
Ardell,
You know the 3 principles! Location locaton location. When that I-405 expansion put your house under that new overpass………. (just kidding)
Anyway, I love irony. Of all the houses to devalue, they pick “She who can wirte about it” (especially with your audience here on RCG). priceless!
I love this post.
Am I reading that right? Is it saying that from 1/10/07 to 3/30/07 it went from $969,000 to $700,000??
A $269,000 drop in 50 days!!?? Talk about Chicken Little…
If it had a plug, I’d pull it. Anyone know where the big Zillow Plug is so we can sneak out in the middle of the night and kill the juice?
I don’t need to know how fair market value is estimated.
I’m not talking about estimates. What I’m saying is if someone gives me 850K for my house, then my house, at that exact second, is worth 850K. That’s not an estimate. That’s not a “line”. That just a simple fact.
I wrote to Dustin asking for an opinion about Zillow a couple of weeks ago. My experience was that a house we bought to fix up had a zestimate of $314K when we bought it. We paid $298K and put $35K into the home. When we put the house back on the market a few months later the home reflected the $298K purchase price. After adjusting the data for the work we did and the zestimate actually went down.
The house sold in the price range we wanted. In the back of my mind it bothered me that they had asked me to input data about the house. It also bothered me that the zestimate shows up side by side with our asking price when I input a listing to be shown on Zillow.
Recently while working with For Sale By Owners the same sets of concerns had been expressed about Zillow. Two people who had inputted the work done data also had the value go down on the property. The other thing that’s weird is that if a For Sale By Owner goes to the trouble to list a home on Zillow the asking price is shown right next to the zestimate. If there is a buyer shopping on Zillow why would they pay more than the zestimated price?
Marlow posted yesterday about ads she placed on the site and it makes sense that ad revenue could be the business model. What I think though is that Zillow asks people to input property data to collect it and sell to other Real Estate agents.
I use the zestimates, now, to show sellers that they need to lower the asking price of a home. No matter what I say, the general public who goes to this very professional looking site are not going to be inclined to pay more and why should they?
So it doesn’t surprise me that your home went down in value in three months. It seems to be the current trend for zestimates.
Ardell, I just did our old house and it shows a small dip in February…it’s really a hiccup…NOTHING like your chart! If I switch from $ to % for market change, then it’s pretty close for our neck of the woods in West Seattle.
Yikes! I could not even begin to explain that. I went back to recheck some of my stuff and I see small declines – on the already off estimates, ahem…
So now what? How does that get fixed and can you remove the listing? I am curious to see how this plays out..
Ardell . . . that is a serious graph. It seems that the consensus of people who have been involved in the discussion over on our blog think Zillow isn’t anything to be concerned with. I’d be concerned if I were selling your house and all the potential buyers were seeing that drop . . . they’d be running away . . . FAST. While many people argued that the values aren’t important, they are when people have come to rely on them. When you can’t sell your home because you are far off of what Zillow is guesstimating, there is definitely a cause for concern.
When the Zestimate is well below your asking price, as a broker or owner you’d better get on the site, post the listing, and explain why it’s worth what you’re asking. You know your potential buyers are likely to go to your home on Zillow to see what they have to say, why not be there too to show the accurate and complete picture of the property?
fwiw, I agree with biliruben’s idea that value is set when the ready/willing/able buyer and seller agree on a price — the market clearing price. I think most professional appaisers would too. That MCP might be above or below the list price, the zestimate, or a recent appraisal — but at that moment in time (again, assuming the buyer and seller are both able to perform), that’s the market value. It always cracks me up to see a listing that’s been sitting for three months with public remarks like “Run don’t walk! This one won’t last” and best of all: “Priced BELOW market value!”
Here’s another Zillow graph with an abrupt trend line, reflecting an $800k jump the past 30 days. But there’s a good reason: Sale just closed at the “new” zestimate of $3.5m, reflecting that now-established market clearing price. That sale is probably good evidence that the prior zestimate was well off, and Zillow (at least in this case) corrected for it:
http://www.zillow.com/Charts.htm?chartDuration=1year&zpid=48726422
(full disclosure – I am a director at Zillow. And as a 19 year broker here in Seattle, my directorship notwithstanding, I’ve been a fan of the site sinces its launch as a tool for our agents and as a source of information for our clients.)
I think a lot of people would really like to have faith in the price. Let’s see if they have a good explanation for a $269,000 price drop in 50 days.
Gordon,
Obviously the house itself didn’t change in that 50 day period. So an owner putting in the particulars of their house or not, should not create a nose dive in the value.
You’re not honestly offended or disheartened by the drop in your zestimate, are you? And maybe you’ve said somewhere on here, but where, in your expert opinion, does the “market” value of that house lie today? Is it $780, or is it closer to that $974k peak in the line?
Zillow (or any AVM) will never be – can never be — the definitive authority on what a market clearing price might be. We both know there are just too many factors in play, and not just factors that can be plugged into the AVM, but market considerations and maybe most importantly, the actual negotiation process between my RWA buyer and seller. That’s why Zillow endlessly encourages the consumer to get a hold of their experts — their agents, or other resources — to help them refine the Zestimate and come up with what might be an accurate market price based on all the fuzzy science with which experienced agents are so familiar.
People will need to place our faith in other places, Ardell. Like their trusted real estate agents! (seriously. quit laughing!)
Gordon,
I have been reluctant to say what David G. said, “I totally agree with you that buyers and sellers are quoting Zestimates in negotiations.” Even though I have SEEN it happen. With that cat out of the bag, are you know going to try to say that people are not using Zestimates as a consideration when making offers on properties?
Zillow was insulted when Dalton called Zillow “a parlor game”, now you want to say it’s a parlor game and a homeowner should not give a second thought to a $269,000 price drop in a short period of time?
You can’t have it both ways Gordon. Is it a “parlor game” as Dalton says, or is someone going to explain a $269,000 drop in 50 days?
You know as well as I do that pricing in the Seattle area, given some very unique one of a kind homes, is not about straight comps. There is not one other home in the area like mine to comp from. Adding this type of ambiguity into an already gray mix, is unconscionable.
Someone answer the question and stop saying “Don’t worry your pretty little head about it”. Or no problemo, just negotiate that $269,000 spread.
Spreading misinformation is not a professional thing to do. What if agents told everyone your house is worth 25% less? Are you saying that would ;have no impact whatsoever if everyone who brought a buyer to your home said it was worth 25% less than it was 50 days ago? Are you saying you would laugh that off?
I have been with many a buyer who is looking at that Zillow Zestimate and even if they see otherwise, it scares them to buy something for many thousands less than the Zestimate, let alone $269,000 less practically overnight.
What if someone bought a house for $969,000 and woke up the next morning and saw a Zestimate of $700,000. You really think they would laugh?
Yes, Gordon. I’m ticked off! I want an explanation and I want to know how owners of property can FIX the Zesitmate. Not stick up a higher number NEXT to it.
If this were my mother’s house, she’d probably have a heart attack seeing her price drop like that with no explanation. You seriously could affect peoples health.
I’ve been DDRing to work it off 🙂
You give the Zestimate far too much credit, Ardell.
Seriously – I can not believe that people are STILL Saying that the consumers are not paying attention to the Zestimates. Are you joking me? Really. I have IN FACT seen it with my own two eyes. Stop pussyfooting around the obvious –
You can not convince homeowners that “People really don’t believe these estimates” – TRUST ME. I am here telling you on ARDELLS post that it is being looked at the the homeowners are trusting the information. I am sick and I can imagine what homeowners who see a $269,00 drop in value feel –
In my opinion the reason the consumer gives credibility to z_llow is because the number of agents and brokers that buy ad space on it. It shows the brokerage community supports it or they wouldn’t put their name on it. The site is littered with agent and broker names now agents are going in and putting extra data in on their listings. Ardell was one of the first agents to do this.
I have seen listing presentations where agents talk about how they will “Enhance the listing on z_llow”
Ardell –
That graph has me stumped. Thanks for sending your address — I’ve forwarded your Zestimate to “the lab” for analysis and I will let you know what I hear.
You are quoting me out of context — please note that I am talking about negotiating, which as you know is nothing new to the buying and selling of Real Estate. I know that consumers don’t view Zestimates as “the final” word. Just because the consumer doesn’t agree with you and clings to their Zestimate, also doesn’t mean they believe the Zestimate is the final word – it just means you failed to convince them.
Do you really believe that your sellers would not receive low-ball offers and that buyers would not make them if it weren’t for Zestimates? Would all buyers offer list price if it weren’t for Zillow? Of course not.
4,1 Million people visited Zillow last month and Seattle’s on of our busiest areas — so, “Zillow” is going to come up more often than not in your conversations with consumers — and yes, Zestimates will be quoted in negotiations. That’s all those conversations are; negotiations. With examples like the one above, how can you possibly lose that negotiation? The Zestimate is often the first opinion of value that a buyer/seller will get and yours is often the second — so, it is natural that those people will compare the two and ask you to explain the difference. Gordon’s right, it makes sense to be prepared to have that conversation.
To quote you, Ardell … “isn’t hating Zillow like hating your calculator?” …. and likewise, isn’t believing that Zestimates are the final word on pricing, like believing that your calculator could spit out a CMA? I find it very hard to believe that you are loosing that negotiation with buyers and sellers. If so, Brian’s probably be right — you could be giving Zestimates too much credit — maybe changing that opinion will actually be the one good thing to come out of your home’s Zestimate. 😉
Ardell,
If you want to pull the plug, I’d recommend visiting their data center with a back hoe or perhaps launching a D.O.S. attack. I was going to say the price fell because we visited, but then I noticed my house hasn’t fallen in value, so that can’t be it.
I think Zillow should have “circuit breakers” (like the stock market) so if the value of a house falls more than say 10% or raises more than 25% in a week, they place a hold on creating further zestimates for that property until they figure out why the zestimate value changed so much. Wild price swings do little to establish Zillow credibility.
It’s either a bug or bad data. Your home obviously hasn’t changed in value that much (or your home is on top of indian burial grounds, that Zillow knows about and you don’t yet) 😉 Either way, somebody should investigate it and determine the cause.
Good Morning Gordon!
Thank you for answering my questions about Zillow. In my strongest language let me express my disappointment at your response to legitimate allegations.
You’re a crook who has preyed on the Real Estate community. You entered the redfin category of leeches on the American Dream of home ownership.
What about the consumer? What responsibility do you have to them? First the Zestimates were too high now they are too low, I did in fact enter data and the computer program lowered the zestimate on my home. Your response here is to hide behind your fervent assertion you are encouraging the public to contact thier Real Estate professional.
You’re a crook who is hoping to generate an internet based Real Estate business. Rather than prospect, you have spent your advertising dollars trawling the internet looking for victims. You are claiming no responsibility nor any indication that the system is flawed to be worked on over time.
It makes no difference really if you fix the system, it’s out of date. Not only is it out of date the idea it will be monitored or improved over time is ridiculous. You’re getting paid today so why fix it?
Property is not the same as a stock, book, or car. These are people’s homes, businesses, and dreams for the future. The fact you chose to attack those basic principles of the American Way of Life for a few dirty dollars is reprehensible.
Gordon, you are free to pursue your dreams also. That freedom ends when it damages others. I see today you are not above doing damage. I”m thinking I read at one time a lawsuit was filed against your company for discriminatory practices. Given your responses here I don’t think that was frivolous.
Seriously Gordon, I’m not laughing.
On a related note: I own a 29 unit apartment complex that I bought a year and a half ago. As many do, I typed in the address for nothing more than curiosity, and the estimates orginally tracked fairly close to reality (probably just because of the recent tax record sale data), though with a very wide range. In the past few months, the value of the Zestimate mysteriously dropped by literally almost 50%, even though the rents have gone up, property has been improved, and it’s worth even more now than the original purchase price and Zestimates.
Lesson: most people use Zestimates as ballpark figures for residential homes, but it definitely is out in space regarding investment properties so don’t even bother there.
David,
As Christine said, it’s time we stopped pussyfooting around this issue.
No one more than I has given new business models a chance, and an open mind and tried to look at them in a fair and balanced way.
But we have a lot of licensees in the Seattle Area. Many, many agents came to be a real estate agent from the technology industry. Much of the buying and selling public here in the Seattle Area is in the technology industry.
I have seen a techy buyer with his “agent-used-to-be-Microsoft-employee” making offers at Zestimate Value.
Time to stop pretending that Zillow is not affecting home owners. “Do It Yourself Real Estate” equals making an offer through Redfin at the Zillow price. Throw in a Public MLS to the mix, and you have “online” real estate and “online” market shifts.
When you have a business model springing up that doesn’t show property or give opinions of value and the agent has never even see the property prior to offer, coupled with an online valuation tool, all you have to do is throw in a Public MLS system, and Zillow becomes a significant detriment and danger to the home selling public.
Scott,
So how would you react if you put your property for sale and all of the offers were coming in at the Zillow Price from people writing up offers at Redfin with no agent involvement? Not saying that would happen with income property, but you could see the pressure of the Zillow value affecting the cap rate at which buyers are willing to pay. Could be a shift to only those with immediate cash flow being saleable.
The numbers of buyers calling listing agents just to get in and buy through Redfin is increasing. The number of buyers using their own methods of valuation is increasing, and the reliance on the Zesitmate in some form is increasing. The number of people getting real estate licenses to buy and sell their own property, utilizing online tools for valuation, is also increasing particularly in the investment property arena.
Wow Ardell,
What happened to you? The defender of all that is evil has seen the light and has left the dark side. May I be the first to say welcome back.
“1 Million people visited Zillow last month and Seattle’s on of our busiest areas”
If you said all houses were with $50, how many people would visit? If there was zero credibility as in they all said $100,000 with no variance, how many would be looking?
More looking equals more people believing there is something TO that valuation. Time to get better at it REAL fast, because as difficult as it is to read David Losh’s comment up there, we’re getting dangerously close to that being the nail head.
Hey Robbie,
You got any black stocking caps? I’ve got the black tights and REI skin tight black gear, but no stocking caps. How about those see in the dark infra-red thingies?
What people aren’t seeing here is that there is no way to go out and find 3 comps like my house. Much of Seattle IS that way. I have a 1921 bungalow frontage with a remodel that added over 2,000 sf in 94 and the whole second floor is a master suite. Not everyone has a cookie cutter” house where “comps” equals basically identical home. You can’t find one like mine let alone 3 recent sales like mine.
The art of valuing property in much of Seattle is a relative valuation where “if this house equals this, than that house can’t be the same”. It is not a simple “here are three comps that prove value” type of town.
Where Robbie lives it may be. Newer construction. But you take a house in Green Lake built in the 1800s and remodel it, and you don’t have “straight comps”. Had a builder call me yesterday with a product like that. Fully remodeled home built in the 1800s. He can’t find ONE comp, and is trying to “piece together value”.
Sometimes it takes a room full of professionals to piece together value. When our methods are that abstract, consumers may say, “Heck, let’s just go with the Zillow price. It’s a lot easier. All this is giving me a headache.” They can, they will and they do. Lacking a clear picture of value, Zillow becomes the easiest route, and home valuation is anything but simple in this town.
Allen,
At least I can say I entered the fray with a completely open mind. I didn’t waltz into the party with a pre-determined and defensive viewpoint and I’m not being “Agent-Centric” about it. This is harmful to property owners. That’s a Consumer-Centric viewpoint AND it is based on what I am seeing, and not some “fear of the unknown”.
But thinking we can just call it Z and R-fin? I think that’s childish. Looking at it first with an open mind, and then based on reality as there is more info to review and digest, I think, makes it a more credible position.
Ardell,
I prefer to analyze the situation and review the pros and cons before I make a decision or jump on the bandwagon. I just wish other people would do the same thing. Many people in the industry are just worried about today and don’t think about tomorrow.
I disagree with the childish notion of not using the full business name in posts. In fact every time one of these companies can get someone to write about them or use their name in a post it increases their positioning on the popular search engines. It is not in my best interest to help these companies grow their online brand. When the guys at r_dfin stir the pot and get 1000’s of posts that reference and link back to their site I assure you they enjoy all the new found and additional traffic. I call this “Gorilla Blogging” is it childish or understanding the ramifications of your actions.
Hi Ardell,
Fortunately investment properties are more CAP rate based than the more subjective elements of residential real estate, but to answer your hypothetical question: it would be quite irritating to deal with offers based solely on Zillow estimates and coming from Redfin agents who don’t know anything substantive about the property, mostly because I’d have to waste my time going through and responding to irrelevant and non-reality-based offers from the Redfin/Zillow alternate universe.
Redfin’s another issue entirely. I find their business model to be a misuse of the system and a unilateral re-shaping to benefit themselves only, which is unsustainable on a system level. I have absolutely no problem at all with discount brokers (ZipRealty is a good example of a proper discount brokerage, in my opinion; they offer lower service levels than I do for lower cost, which is a great match for some buyers/sellers). However, I do have a problem with a company such as Redfin that unilaterally has decided to force its buyer agent responsibilities onto listing agents that do not work for Redfin. Redfin gets all the accolades (such as the unfortunate recent infomercial article on the front page of Seattle Times Real Estate section, which was amazing in how it regurgitated the Redfin marketing line without question) while Redfin completely relies upon others to make their discounts and entire business model even possible. I also find some of the marketing information on their website to be unfortunate and misdirected; some of their representations have been either based on half-the-story information or are provably flat wrong. In my opinion, they also present a dangerous bridging of buyer agency (or lack thereof) by putting most of the truly hands-on, critical, detailed, property-specific, on-site work and representations primarily in the hands of the listing agents who, by contract and by law, represent the seller and the seller’s interests.
Allen,
I would agree if agents did the same for Coldwell Banker, RE/MAX, Windermere, John L. Scott, Century 21, and all of the other brokerages. And IF they did so consistently over the last 50 years. But I didn’t start seeing the “don’t even spell it” comments UNTIL there was a Redfin and a Zillow, and I did not see the letters being removed EXCEPT on Redfin and Zillow.
To me, that is a boycott of new alternative business models. In fact, I didn’t even see them doing it to “discounters” like Help-U-Sell and Zip Realty. I never saw anyone saying “just say Z” for Zip Realty?
So when I saw agents in agent forums saying “Just say Z” about Zillow from day one, I could feel the difference, Allen. And clearly, MOST agents and brokers were treating Zillow and Redfin differently, along with MLS4U. They were not wishing them the best, and holding their opinions in a “wait and see” style. They were jumping in with negative comments from day one, and refusing to spell the names of the companies from day one. That’s a whole lot different than a reasoned “wait and see” approach.
Given the industry was taking this stance, I went in the other direction. Where the industry did the boycott version of “wait and see” I did the “let’s support them while they figure it out” wait and see.
If you go back to my original speakings on Zillow, I say from day one, that NO agent should put a property in Zillow without the Owner’s Permission, given the Zestimate’s possible and potential influence on home buyers. Nor have I put any in there without the owner’s permission.
I entered the arena in a supportive manner, but not blindly as to my client’s interest. Now that I am seeing harm done to the marketplace and home owners, I am taking this position. Zillow is dangerous to home owners. I’m doing it based on what I am seeing, after giving it all a chance to play out. Some may say I’m just another defensive agent being agent-centric…but those who read me on a regular basis, know otherwise. This is real and this is bad.
That singular valuation number needs to go away. I’m with Arizona on this one, until and unless a Zestimate is a range and not a single number. I’ve told Zillow that from day one, and have repeated my thoughts to them privately. In fact I emailed them BEFORE they even opened up the first time with my thoughts on this.
Now it’s time to say it out loud. Get that single valuation number that looks all too real out of the public eye. Homeowners should band together in a class action suit and “make it so”. I’m not saying shut down Zllow. I’m saying post a range of possible value only. It’s the right thing to do. Nose dives in valuaton are startling and I’m proof of THAT pudding.
A BLOG is a WEBLOG that answers in immediate fashion the questions of the day. My ACTUAL reaction was posted here, as it happened, as I saw it, and as I reacted TO it. No made up stories of what MIGHT happen..real time…real life…real reaction. As close as the internet can get to Reallity TV, that a Blog.
Ardell –
I did not suggest you aren’t open minded. No-one is pussyfooting. I said “4,1 Million”, not 1 Million. Please read my comments. You are loosing negotiations, not meeting people who believe that the Zestimate is the final word in valuations.
Ardell – Did you mind when your house’s Zestimate spiked from around 625K to 957K early last year?
I think I would like you if I met you, Ardell, and I am guessing you are a very good agent. I might even have considered hiring you, and still might, though this post makes me have second thoughts.
Sure, Zestimates are never, EVER going to correctly nail the real underlying value of a house. That’s just a fact. Is Zillow’s methodology flawed? Yes. Absolutely. But the level of hubris on display in this post is truly remarkable, and frankly off-putting.
Is there a chance, just a small chance mind you, that perhaps your 1921 bungalow with 1994 addition in a 3rd-tier suburb of a 2nd-tier city ISN’T worth a millon dollars? Could there be a slight chance that maybe you over-paid? Could it be that you misjudged the market trends, and that the recent buyers in your corner of Kirkland, in your house’s price strata may be unwilling to pay what you paid? These prices, I assume, are a good portion of what goes into a Zestimate.
A million dollars. Think about what that is. That’s likely enough to feed, house and clothe an entire village in Bangladesh for their lifetimes. Even here in the US, if someone handed me a million dollars, I could retire and live comfortably, if not extravengently for the rest of my life.
Even right here in Seattle, as an apples to apples comparison, as recently as 1998, less than 10 years a go, a million dollars would buy the premier mansion in the premier neighborhood in all of Seattle; 613 W Lee.
Maybe, just maybe, Zillow is more right than you are.
Biliruben: “Maybe, just maybe, Zillow is more right than you are. ”
You just made my point, thank you. When the general public can even THINK that Zillow migh be more right than the owner and the real estate professional, which in this case is one in the same, Zillow needs to be more responsible and not whip prices up and down “at whim”.
Biliruben, The dirt UNDER my house is worth $700,000. I can get an exact value of the dirt. But for these purposes, that is 90% accurate. When I bought it the dirt under it was worth $650,000. So there’s no way the house has gone down to LESS than I PAID for it.
I have also had it appraised. But that is not the point, as others have said. Whipping someone’s price up and down at whim is NOT an option. Pick a freakin’ algorithm and stick with it. How can we “explain away” the Zestimate, if they keep changing with the wind. If they are going to make us answer to the Zestimate, then stop whipping it around like a yo-yo, so we have to keep chasing after it.
My views on Zillow have to take into consideration the instances in the marketplace of consumers using Zillow when listing homes and when negotiating prices.
Going back two years or 18 months to what WAS then, does not take into consideration the fact that consumers are using Zillow and Zestimates differently in the last 3-6 months, than they did a year ago.
I agree that that it would be nice if Zillow came out with a perfect algorithm from the get-go. Given that they didn’t (and couldn’t possibly have) however, I can’t fault them too much for trying to refine it.
I’m actually not sure if they changed their algorithm. What it looks like they did was take into account what you paid for your house for about a year. After that, market forces (what people are paying now) went back to dictating the greater weight of the Zestimate, and your house fell in line with where it was before you bought it. You can argue whether that’s a good algorithm, and I would argue that it isn’t. Therefore, I would hope they tweak it, and continue to tweak it until they do a better job.
You never answered me on whether you were happy or upset when your Zestimate went UP around 330K.
How do you know your dirt is worth 700K? Did a developer recently offer you that to raze it?
If they are going to make us answer to the Zestimate, then stop whipping it around like a yo-yo, so we have to keep chasing after it.
What I don’t get is why someone that isn’t planning on selling their home gives a rats a$$ about what the day to day Zestimate is. It’s about as useful as stressing over the day to day fluctuations in the price of a single stock in your mutual fund -emotionally draining yet inconsequential in the long run.
On a side note, I see alot of really cheap “northwest contemporary” homes from the 70’s and 80’s with square foot prices well below a more popular style in the same neighborhood. A few years ago, the 50’s and 60’s low slung ramblers were out of style. Now that every $300K townhome project is “craftsman style”, maybe it’s diluted the prestige a bit. I’m seeing more recently built construction opting for a modern or tudor look. Maybe the “craftsman” fad is done?
Biliruben,
Again you make my point. You are an above average consumer giving more credence to the Zestimate, and saying Zestimates are of no-nevermind.
The more you insist the Zestimate may be “more accurate”, the more you make my point, and I thank you for that.
All agents who value property in any area that has tear downs, such as Kirkland, Ballard, Green Lake, etc, must know the value of the dirt in order to accurately price property. Different lots have different values. My lot and the one next door are equal for the most part, and there is a tear down on that lot. So easy to know the value of my dirt.
Around the corner there is a tear down and new construction going on as we speak, that lot has a different value with different considerations.
Every agent has to know the value of the dirt to be sure they are not selling “the house” for less than the value of the land, which is an issue where lot values are high. Not much chance that would happen, as the builders are beating the bushes for lots and would be the first one at the door. Have had that happen recently on a property in Bellevue with lot value of 1.1 mil and only City view.
Yes, Biliruben, we know how to factor minor increments of view into the value of the dirt and house. We know how to make sure our buyers do not overpay for property. We know when you can see Market Street traffic you have to subtract the noise and traffic in the view consideration, from the Lake and City view consideration. We know how to value the other side of the Street that has same view, but no Market Street traffic and noise considerations.
Yes we know the value of dirt, and it takes about 48 hours to carve the real value of the dirt in stone. You just put a sign up and take the builder bids, or you just call some builders and say “come and get it” and they will bid each other up to the highest available price point.
But I wouldn’t want to or need to do that just to prove my point and make them work for nothing, as there are teardowns in this view corrider all the time. I can easily see “the value of dirt” here. Redmond? Not as easy and not necessarily relevant either, as most neighborhoods have NO tear downs their.
But ANY portion of the Puget Sound that has builders buying old houses and building new ones where old ones now sit, has a “value of dirt” component that is essential to valuing property.
I do not expect Zillow to DO that. I do expect them to at least ATTEMPT to compare view property with view property and non view property with non view property. New houses with new houses. Split entries with split entries. That is not too hard to do. No reason to ignore reality and initially “who cared”. But now that people are using Zestimates in negotiations…time to get BETTER.
It ain’t rocket science. But it is a science that deserves more attention to reality than it is now getting. And it IS hurting people that are selling their homes. It IS. Moreso in some areas than others, yes. But when it starts hurting people…time to “get on the stick”.
biliruben,
It is expected that refining this type of algorithm can be done only in real-life situations ( getting the feedback from customers and adjusting).It is also normal there is always going to be people that are complaining (prices is to high, price is toolow…). With that said I believe that Zillow is in the certain type of bussines. And that is to provide the home evalue estimates to public. This is where Zillow makes money. As a result they have a certain responsibility (no matter how much diclaimers such as “this is only an estimate” there ar eon the site): to provide as much as realistic estimate as possible. I think the problem is that is “just too cool” and “too spectacular” to have ONE exact amount poping out when user enters the address. I have to go with Ardell’s post from yesterday – Zillow should provide a range, not the exact amount. Maybe they could have two – one that marrows the price and the other (wider range) which is available under th eproperty details (the same as now).
The only reason Zillow does not do it already is that it works better for marketing purposes.
Bill W.,
Should YOU wait to give a RA about something that is hurting consumers today, because you aren’t selling today? We are “the industry” and we need to make sure it is not hurting the majority of the general public.
You don’t give a RA about anyone but you? Do you also not give a RA about diminshing natural resources? About things not affecting YOU today? That’s not very “Seattle-like”. People in Seattle give a RA about other people.
I am using my house as the example because I CAN. I couldn’t use other people’s and highlight their home all over the internet. This is not about Me and MY House only. It is the one I CAN use to explain the problems Zillow is creating in OUR Marketplace with increasing frequency.
I am a little sad that Zillow said here that Zestimates ARE being used in price negotiations between real buyers and sellers. I knew it. Lots of people know it. But their saying it made it “real” and concrete in a way that we couldn’t, without revealing the particulars about what is happening in real negotiations. We can’t do that. It’s confidential info. I can’t blog about the properties I KNOW to have had not one, but two offers based on Zestimates. That is confidential info.
Time for people to know that this IS happening. The values of people’s homes ARE being affected by Zestimates. Zillow doesn’t deny it…why are you Mr. Waters and Mr. Biliruben??
You make our point every time you question that professionals may know more than you regarding value, and what is happening with real estate in the Seattle Marketplace. You’d rather trust a Zillow than an agent. Seattle Bubble says every day that they don’t trust what agents say…so what do you trust when you don’t trust the professional…maybe a Zestimate??
Thanks Dzipi. How about basing the Zesitmate on the last 3 or 4 sales NEARBY the property with similar value considerations? Is that too much to ask of an Algorithm? You techie guys know that better than I.
Wow—ok I’m from Miami and nobody here gives a hoot or even mentions ‘Zillow’. Good marketing and PR for them ‘those Zestimates’ but I think the longer things like this go on, more and more of their ‘relevancy’ goes down the tubes. I had another agent ask ME today to provide HER with a CMA of one of my listings. She wanted to see what it was worth. I told her that it is only worth what a buyer will pay for it.
I’ve only been to this ‘Zillow’ place once (honestly). It seems like there is a lot of talk about a site that continues to highlight its ‘irrelevancy’
Maybe housing should be sold in an auction type setting. Ebay for houses?? Why not? Seems like the easiest way to establish the value. Again, it all boils down to the value equaling what somebody will pay for it at X point in time. It seems like that keeps getting lost somewhere in the debate.
“Should YOU wait to give a RA about something that is hurting consumers today, because you aren’t selling today? We are “the industry
If you look at the standard MLS listings, you see properties being priced poorly by licensed agents all the time. Considering Zillow is free whereas agents charge their customers thousands of dollars for their supposed expertise, shouldn’t the more immediate concern for the sake of the public be tracking, reporting and making available to the public every instance an agent makes a pricing mistake?
Bill Waters,
You raise a very interesting point, and one I have been thinkng about over the last couple of days while we have been discussing this.
Has the pendulum swung? Is someone intending to swing that pendulum…a few somebody’s all at once?
Clearly before buyer agency, it was every agent’s job to get the highest price possilbe for property. In fact the Realtor Code of Ethics, when I started in real estate, said just that. Our “lofty goal” was to elevate the value of real estate, generally.
That was done because it eliminated duplicitous purpose and was also done on the theory that every buyer is someday a seller, and all owners benefit from an industry that supported the value of real estate to any and every degree within their power.
Since we left that single minded purpose, the train has been derailed. In our area, with home buyers often being transient and without regard to future values, is there pressure not to balance the scale, but to actually swing the pendulum into the buyer’s favor. And is that thinking being supported by new business models and those that champion for them?
Interesting food for thought.
If you are suggesting that Zillow has some motive to put downward pressure on prices, a quick glance at the Zestimates of just about every house but yours (and yours as well if you would simply show us 2 years of data), provides strong evidence to the contrary. My modest cottage has been bombing along at alarming rates of appreciation.
It is the very definition of a starter house, yet I can’t fathom how anyone without a large enheritance or a healthy dose of foolish bravado (delving into the dark side of Alternative mortgage products) could reasonably afford it any more, if the Zestimates are to be believed. Needless to say, I think the Zestimate is well beyond what the true, underlying value is.
I think this goes back your “dirt” discussion, Ardell. During speculative run-ups, such as the one we are currently in, “dirt” is attributed unreasonable value, because developers are still able to tear-down and slap up a McCraftsman or two on the lot and make a decent profit.
After the run-up is over and the thirst for profitable tear-downs recedes, the value returns to reflect more what the house is worth, and the speculative land premium that was tacked on due to the possibiilty of a tear-down opportunity will dissapear.
Is Brothers and Sisters on tonight? Does anyone know?
Biliruben states: “I think this goes back your “dirt
Kevin…LOL. You crack me up! Thanks for the laugh.
Ben,
You sound like someone who might use a Zestimate as an offer price. Keep it up, and thanks for the support.
I’m annoyed with all of this. It all comes down to what a buyer is willing to pay AND what a seller is willing to accept.
Gordon…A Director at Zillow said…
“When the Zestimate is well below your asking price, as a broker or owner you’d better get on the site, post the listing, and explain why it’s worth what you’re asking. You know your potential buyers are likely to go to your home on Zillow to see what they have to say, why not be there too to show the accurate and complete picture of the property?”
Why should people have to correct your mistakes when you are off by millions in some cases?
It annoyed me when I bought a HDTV based on CNET’s initial rating of 8.6, only to check back a few months later to find it was down to a 7.1.
Whether this was a vast conspiracy or just a change in the market, I’ll never know. 😉
The only thing I see that has been “nudging” the housing market is the ability of people to take on more debt. We may have hit the ceiling on this for a significant amount of the population. It’s just unfortunate that debt has been the major economic driver the past few years.
Ardell, I’m generally a supporter of yours and you and I have been in private correspondence previously (I never heard from Kosta about developer interest). I’m very disappointed you didn’t even try to address my point but simply made an ad hominem attack on me.
Ben,
I apologize for the short, but I thought positive, response. Sorry for being so short there, and here again. I’m showing property this evening and will address this when I have more time.
That’s what I call a “thread”! What bugs me the most is not the zestimate or the sudden price changes, it’s the RANGE. I had a $400K seller showing me how “Z” had a $120,000 range for the price of his property – are we grasping at straws here?
no doubt Ardell…what a thread!…it appears that you have a national audience and not just super duper special Seattle.
I’ll definitely be popping in more often now. It’s too bad that RCG doesn’t have a hit counter at the bottom of the page.
Ben,
I’m back. Sorry. Was batting too many balls at once there.
Agents rarely price a house improperty, more often it is the interaction of the owners. But every house has a “range” of value and the price needs to be “tested” against “what the market will bear”.
That’s a whole lot different from someone tacking a different price on your “for sale sign” as an owner, which is the equivalent of what Zillow is doing.
Take this example. If I go stand outside of a restaurant with a sign saying the food is bad and overpriced, does it matter if it’s true or not? Is it OK for me to do that and then say, hey who said they had to BELIEVE me? I think not.
At least make it a more educated guesstimate with a firmer basis, and adjusted per area.
Here is why I stopped putting any value in Zillow: they are miscalculating the data from Pierce County (WA). They will include any beds/baths listed in the finished basement square footage, but NOT the finished basement square footage itself! Since their formula lowers your value if you have a higher number of beds/bath per square foot (try it out on your house), this means the value plummets. AND you don’t get an accurate square footage assessment.
I’ve written to them several times and they said they cannot fix it (no reason given). It surprised me since this is simply a calculation error that should be easily fixable. And it’s totally throwing off their Pierce County assessments.
Zillow’s “Zestimates” and most AVMs are crap, that’s why. And they don’t care enough to do anything about it because it brings people to their site, which is all the really care about (traffic).
Remember, Zillow was founded by ex-Microsoft execs and just like Microsoft, they’re about quantity, not quality. Oh crap…a Zillow, I mean syntax error just occurred!
I noticed the same thing that Zeeb did about Zillow in pierce CO. My childhood home is on a street where all but one of the houses have walk-out daylight basements (they’re on a steep hill). About 1000 square feet are missing from the report for my old house, making the “zestimate” quite questionable… the bedroom and bath that are in the daylight basement are in the report. The only zestimate that even looks close is on a house down the street that recently sold. Its really strange that they can’t get it right.
Interesting observation. Bellevue and Redmond, among some other Eastside locations, has tons of those. Most Split Entries are just a few feet raised version of a daylight rambler.
I’ll do some testing and see what I come up with.
That could have something to do with my Zestimate as well as two of my bedrooms, a three quarter bath and a full living room on down on the “basement level”. The daylight side of the slope on mine is not the living space, it’s the garage. I have an alley in the back which makes our houses look look they don’t have a garage. The garages are all in the rear, that increases curb appeal, but also makes it look like the garage is missing.
David G. of Zillow and I had an interesting chat yesterday, but I had to go show houses and cut him a bit short. This issue did come up a bit regarding owner changes NOT being reflected as a Zestimate change at this point in time.
We will continue our discussion and report back next week, and I’ll test some more things highlighted by Zeeb and Abbie. As of now it would appear that even if Abbie made the corrections, here Zestimate would not increase. It would say Zestimate $2 Owner Estimate $100,000, which does no one any good.
“It would say Zestimate $2 Owner Estimate $100,000, which does no one any good.”
– Ardell
So you are suggesting that Zillow should just let anyone corrupt their estimates by editing the “facts”? That would make their estimates worth than worthless. No they may be a bit arbitrary, but they aren’t deceptively biased.
Check out 16131 41st Ave NE, Lake Forest Park, WA 98155. (I really wish RCG would allow links and html. It would make things a lot easier and more useful.)
This guy buys a house in 2004 for 549K. Puts a bunch of questionable updates in, and refinishes the basement (don’t get me started and people listing holes in the ground as “living space”, as if it is equivalent to square footage built above the actual surface of the earth, rather than for sub-pumps and Sleestacks.)
He then goes on Zillow and edits the information so that every dollar he claims to have spent renovating should be stacked dollar-for-dollar, on top of the Zestimate (which itself got jacked up because of the expanded sq./ft number after renovating his basement). Now the price is triple what he paid 2 years ago? Would that be useful for anyone, if that’s all Zillow choose to show?
This house obviously isn’t worth a million and a half. He’s not fooling anyone. It’s been sitting on the market for over a year, IIRC.
Yeah, that’s good solution. Let the lunatic sellers rule the asylum.
Biliruben,
How would you value finished basement square footage? What if it is above ground, say in a daylight basement on the daylight side of the house where it is not underground? Let’s say the upstairs is valued at 300 per square foot. Where would you put the finished basement underground vs. not underground but “lower level”? Certainly not at zero?
Just be honest. List it separately. “1200 sq/ft rambler with 800 sq ft, finished basement” would be fine. Add that occasionally light shines down there in the comments, if it does. Just don’t try and pass it off as a 2000 sq ft house. It isn’t.
Below is from a post I wrote back in June of 2006: “What really concerns me, is I see people getting info from the internet regarding total square footage, and doing comps based on this total square footage. “The house across the street sold for $800,000, so this one is worth X on a “price per square foot
I do think a “home theater room” on a basement level would value higher than an underground bedroom. A room that is “better if underground and dark” with theater seats, etc. would be appropriately placed in a basement, and I am seeing more of them.
Our opinions are similar, Ardell. Fight good fight!
My struggle, Biliruben has for many years been this:
When I enter a new area, do I “Do as the Roman’s Do? Or do I hold myself to the highest standard I am capable?” Do I succomb to each common practice of each local area, or do I apply a better way if I know one, as a result of my broad geographic experience?
Do I listen to those who say, “But that’s not how WE do it HERE”? That’s why I pay a lot of attention to “consumer-centric” vs. “agent-centric”, even though I’m not sure any of us know EXACTLY what that means, I am getting better at applying that single approach.
It takes a lot of internal combustion and practice though, and it can be a lonely game to play at times.
Again–I would like to stress that this issue is very pertinent for Zillow. Zillow is committing fraud by counting my one bed/one bath that are in the basement sf (daylight, btw) but not the sf itself. This is just plain wrong and, to my mind, highly unethical.
I think that this just shows that Zillow is not the end all be all of all that is in real estate evaluations. Ardell is right on that all square footage is not created equal. The daylight basement at my parents old home looks just like the first story of a typical two story house from the backyard, while from the street, the house looks like a one story. I’m not in real estate, but wouldnt at least some of that basement square footage be assessed a little bit differently from a basement that is entirely below grade with only egress windows?
I agree w Ardell that you can’t really put a value on a property unless you actually send a knowledgeable person out to view it. Again – Zillow isn’t sending actual people around to account for variations like this and in Pierce CO it seems like they don’t even acknowledge that a basement exists. IMO they should emphasize more of the “estimate” in their zestimate or do away with it all together and keep the price range only.
I have a current basement gripe with the listing for my current neighbors house which states: 4 br/2ba however, no mention is made that two of the “bedrooms” are in a basement with tiny non-egress windows. Perhaps that is why its been 8 months and it hasn’t sold… Maybe the owners are set on a higher price and won’t budge, but I why the listing agent doing what I consider to be false advertising
I can’t say too much, as I am working up the value for an offer on a rambler with basement on the Eastside this morning. This particular buyer’s needs equal daylight basement being a negative vs. completely underground basement. Completely underground basement suits this buyer’s needs much better.
My challenge is in knowing that they value that more, but the market doesn’t. Then I have to factor in a lot of other issues all at the same time. Some of the updates actually devalued the property. Would have been better in original condition. The part that needed updating is not done and the part that was updated was done wrong. So they get nothing for their updates.
But given this is a real buyer and a real house, I can’t show the house and it’s particulars even though it would shed a whole lot of light on this thread. That could bring multiple offers by highlighting the home my buyers are making an offer on today. But maybe “when the dust settles” I’ll come back and detail the considerations.
My job in preventing people from overpaying, is to consider how they value things, against how the overall market will value the property when THEY go to sell it. I then tell them what they should do while they live in it, to pick up the value. So they have little to no risk as the current owner left a lot of money “on the table” by improving the wrong things.
Sorry, I went sideways there into reality. But truth is, daylight is not always a good thing. Like a skylight in a master bedroom is not always a plus. Remember our very long days come June in Seattle. Lots of people want that light to get the heck out of their bedroom 🙂
Everyone loves Zillow when they can watch their homes appreciate for thousands of dollars every week, but when the prices drop, we don’t love Zillow anymore! I have a feeling that people are going to learn to hate Zillow in the coming years!
i made an offer subject to appraisal. i find that the appraiser i hired may have errors in his appraisal. i live in lake county, indiana. for example, he gives credit for a bedroom in a finished basement that has no egress in the bedroom or other areas. i can’t use it for what i intended to. further, he is giving $10,000 credit to other comps simply because you can see a pond view. how can i proceed with this?
If you are getting a mortgage, then the “intended purpose” of the appraisal is for the lender and not you. If you don’t think the property is worth what you offered, the appraisal is not the way to address that. I’ve seen a water view be worth anywere from $100,000 to $10 Million, so a pond view might be worth what he says. It’s clearly worth something.
The expectation is that the house will appraise. Most people are happy when the house appraises. An appraisal is not the way for a purchaser to value a property. Never was; never will be.