How does Zillow stack up with actual appraisals?

We can find almost anything online, right? But what about property value? How do Zillow values compare with actual appraised values? Let’s compare some recent appraisals with values from Zillow (“zEstimates”).

  1. North Sacramento home: Appraisal: $60,000;  Zillow: $87,000 (+45.0%)
  2. Del Paso Area home: Appraisal: $110,000;  Zillow: $70,000 (-36.0%)
  3. College Greens home: Appraisal: $270,000;  Zillow: $290,000 (+7.5%)
  4. Serrano home: Appraisal: $550,000;  Zillow $466,000 (-15.0%)
  5. Rancho Cordova home: Appraisal: $125,000; Zillow: $128,000 (+2.4%)
  6. Elk Grove home: Appraisal: $185,000; Zillow: $185,100 (0%)
  7. Elk Grove home: Appraisal: $280,000; Zillow: $255,000 (-8.9%)
  8. Sun City Lincoln Hills: Appraisal: $415,000; Zillow: $403,000 (-3.0%)
  9. Orangevale home: Appraisal: $145,000; Zillow: $165,000 (+14.0%)
  10. Land Park area home: Appraisal: $305,000; Zillow: $270,000 (-11.0%)

In my experience Zillow is very much hit and miss. It can seem more accurate in newer cookie-cutter neighborhoods, but wildly off in other cases when neighborhood boundaries are very tight, data is scarce or condition varies greatly in the local market. Additionally, it seems to me that the listing price in MLS is given strong weight because Zillow can pull that data over to use in its algorithm.

I know you’re expecting me to say all this, but it’s true. Online valuation sites can be a nice tool to tinker around with for real estate and rental values, but nothing replaces the human element. This is really a classic “Terminator principle” example where “humans vs machines” go to battle and humans win (sorry to give away the end of the movie). While algorithms can be very powerful, they cannot see important neighborhood boundaries, quality of construction, high-level craftsmanship, the motivation of buyers and sellers, condition, positive or negative location factors, any sense of charm or appeal, and so many other elements. On top of all of this, the real estate market in the Sacramento area has been a wild ride and it’s not easy to interpret. So many neighborhoods in Sacramento have close to 70% of all sales being either foreclosures or short sales, which complicates sifting through data to establish true market value. Distressed sales tend to sell for less, but not always, so it makes for a very interesting process to properly value a house.

My advice? Enjoy Zillow for what it is and take it with a grain of salt, but trust an experienced and local human appraiser for the final say.

Go check your Zillow value. Does it seem realistic to you? I’m curious.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Comments

  1. says

    Sometimes borrowers say “I checked Zillow and it said…” What I then tell them is that Zillow is always wrong because it selects the wrong comps. If Zillow would re do its Zestimate based on new criteria then it would become more accurate. I tell the borrower that the correct comps should be narrowed down to a smaller 1/2 or 3/4 mile radius, within 10 years age, and within 20$ sq ft…but the most important thing is to change the date range to 90 – 120 days only. Lenders will have a hard time using older sales, and at least they can see the sales prices of the likely comps being used.

    • says

      Good points. Establshing a proper value is all about understanding the neighborhood market and using the best available data. My house is overassessed on Zillow by easily 40% because the wrong comps are used. I’m not sure if they are using data from the entire zip code, very old sales or superior comps well outside of the neighborhood, but it’s nowhere close to accurate.

  2. says

    Good morning Ryan – Zillow can’t possibly “stack-up” against a local appraisal. As I’ve stated in your previous posts, we really are a place for consumers to start their data and information search since so many local associations, resources, and MLS’s etc. have their proprietary data and information locked up to their privately paying members only.

    I’m sure even you have access to information and private data that consumers can’t access online right? That’s why they come to Zillow and other sites, to get what they can and find out as much as possible before contacting a local professional to help them get as close to market value for their properties.

    Add to that your comment of: “the real estate market in the Sacramento area has been a wild ride and it’s not easy to interpret.” so if a consumer reads that, it’s probably another contributing factor that keeps them searching even deeper and longer.

    I’d like to see a post/report on the differentiating prices between originally “Listed Prices” in these areas, versus what the properties actually “Sold Prices” were, just to compare how many homes sell at the original asking price?

    This could be a helpful tool for listing agents in your area and possibly reduce the potential of “price reductions” in those areas. I’m just curious as well….

    The Zillow data coverage and accuracy median error for Sacramento, CA is currently at 8.6% and you can rest assured that we’ll continue to do everything within our means and power to get that number to withing 1%, but until then, we’ll always need good agents and appraisers in the local areas to help consumers buy, sell, borrow, and invest in homes at the closest to market value prices.

    • says

      Hi Brad. Yes, I do pay for data and my knowledge of the market is seasoned by years of experience too, which plays into the valuation. I think you’re right about why consumers search on your company’s website and I appreciate your response. One of the reasons I do posts like this from time to time is to help educate the public that may rely on online valuation too much. It’s important to see it in context for what it is and isn’t. Interesting last comment, “but until then, we’ll always need good agents and appraisers in the local areas to help consumers buy, sell, borrow, and invest in homes at the closest to market value prices.” I get what you’re saying that a website cannot trump local professionals on the ground. I don’t want to read into your comment, but I wondered if you think real estate professionals (especially appraisers) will not be needed when/if you get that number down to 1%. In context, I think I understand your comment, but for the sake of digging deeper, I am curious now since it can be read in a couple different ways. As always, thanks.

      • says

        Thanks for your response Ryan, and you’re correct, I wasn’t very clear by using the term “until then.” There will never be an online replacement for the local real estate professional and appraiser experts like yourself in the local areas.

        The statement about the 1% was to drive the point home that we will never rest on our laurels or data, we will always be trying to improve and perfect our data, information, products, and tools. We will continue striving to add more value for consumers and real estate industry professionals.

        Zillow has proven time and time again that we can and do create (for many) an opportunity for a digital handshake and introduction. We’ll continue to provide the zestimate, while you continue to provide the zactimate! 🙂

        • says

          Thanks for the clarification. I’m really glad to hear that. I figured that’s what you meant to communicate, but I just wanted to be sure. As always, thanks for checking in. I think you guys have a great policy to interact with others online. So many companies are not listening to what others are saying – whether it is good or bad. Take care.

  3. Anne Graviet says

    Back in July, I twitted about a home that I valuated on Hazel Ave in Fair Oaks that was no way near its $190,000 cheerful Zestimate, no matter how nice the homes behind it happen to be. It went pending last week at $82,900, a $100,000 difference.

    REO account managers often check Zillow and when my BPO comes in at half-price, it causes extra questions and usually results in extra research to defend my value.

    When it comes to our “wild ride of a market” there is no substitute for local knowledge and a “boots-on-the-ground” inspection and report from inside a home.

    Thanks for another great blog post, Ryan!

    • says

      That’s frustrating that your work would be questioned because of a website that is disconnected from “boots on the ground”. It sounds like your BPO was right on. Speaking of BPOs, I did an appraisal recently where there were two BPOs on the property and there was a $200,000 difference among the BPOs. One agent was very clearly way out of touch with the market and the other agent was right on. I was hired to do an appraisal and the value was definitely more consistent with the lower BPO. Interesting stuff. Enjoy your world of BPOs and listings. 🙂 Thanks Anne.

      • Anne Graviet says

        $200,000? Ay yi yi – that seems like a lot, but not uncommon in the high value market, is it?

        This week, a custom home in Los Gobernadores went pending at ~$200,000 (about 10%) less than its $1.8mil list price. It’s easy to be off the mark by 10% one way or the other, it just shows more in the mansion home valuations 🙂

        I get the same back and forth when my BPO follows a prior one and, for instance, the first agent loved the home on Shamrock in Fair Oaks and I didn’t like it at all (not updated in about 40yrs and the popcorn ceiling w/GLITTER in the GARAGE gave me a giggle – somebody paid for that upgrade back in the day – lol!)

        In that neighborhood, original to flip is huge spread in prices so that involved extra research.

        It’s time-consuming and sometimes frustrating but when it’s over, I’ve gained an even deeper understanding of the market values and of its trends so I guess, all in all, it’s “all good” and we’re the better for it 🙂

        Have a great weekend Ryan!

        • says

          This property was in Lincoln and the $200,000 difference was really obvious. Superior upgrades and a location on the golf course makes a huge difference and it’s pretty clear without too much poking around. You always have stories to tell, Anne. It’s good to hear your perspective. Thanks so much.

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