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How does Zillow compare with 10 real appraisals?

By 10 Comments

I have people ask me about Zillow all the time. In fact, it came up last week at a discussion I led for Realtors. Is Zillow accurate? Do I use Zillow as an appraiser? Let me share 10 recent appraised values in 2013 and compare them with “Zestimates”.

1) Elk Grove Condo:  Appraisal: $90,000; Zillow: $79,454 (-11.7%)
2) Rancho Cordova House: Appraisal: $172,000; Zillow $155,567 (-9.5%)
3) East Sacramento House: Appraisal: $315,000; Zillow $399,893 (+26.9%)
4) Elk Grove House: Appraisal: $262,000; Zillow: $267,676 (+2.1%)
5) South Land Park House: Appraisal: $217,000; Zillow: $273, 293 (+25.9%)
6) Roseville Condo: Appraisal: $111,500; Zillow: $113,914 (+2.1%)
7) Roseville House: Appraisal: $415,000; Zillow: $396,763 (-4.4%)
8) East Sacramento House: Appraisal: $232,000 ; Zillow: $368,000 (+36.9%)
9) Elk Grove House: Appraisal: $305,000 ; Zillow: $264,340 (-13.3%)
10) Del Paso Heights House: Appraisal: $65,000 ; Zillow: $76,348 (+17.4%)

Is Zillow accurate? It’s hit and miss. Ultimately I don’t consider Zillow to be reliable. As you can see above, some of the values were really close, but others were not close at all. An online valuation site cannot possibly know the idiosyncrasies of a real estate market – not to mention interior condition, level of charm or quality of updates either. Sometimes tract neighborhoods with a high level of data seem to have more accuracy on Zillow (not always true), while neighborhoods where each street and house are different can be very far off (even hundreds of thousands of dollars off the mark). For instance, in Yolo County data can be very sparse, so an online “valuation” without actual data isn’t all that compelling. I would say if you use Zillow regularly, use it for what it’s worth, but understand its limitations.

Do I use Zillow in my appraisals? I never use Zillow to guide or support values in my reports. Sometimes out of curiosity I will check Zillow because I wonder how a lender might view a property if they run an AVM (Automated Valuation Model).

By the way, I don’t have any problem with Zillow. This post is simply written as an FYI for clients and consumers.

Questions: How do you use Zillow? Any comments or stories to share?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

Is Zillow accurate? You be the judge.

By 8 Comments

After completing an appraisal recently on Ambassador Drive in Rancho Cordova, I wanted to see what Zillow said about values in the neighborhood (for kicks). While Zillow is sometimes not too far off in typical tract neighborhoods like this, I was very surprised in this case to see Zillow had not given more weight to recent sales prices in MLS to establish their Zestimates. See three examples below with my commentary. I did not appraise any of these properties, but I do know them well since I used them as comps in an appraisal report.

Example 1  –  10703 Ambassador Drive: This property sold at $220,000 on MLS and is really the top sale in the immediate neighborhood. But to its credit it has recent upgrades, a larger than typical square footage and it backs to the American River Parkway. Zillow recognizes the sale in MLS at $220,000, but still assigns a value of $178,000 for their Zestimate, which is 19% less than the MLS sale. For reference, there were six offers on this property in 14 days when priced at $220,000.

Zillow Sale 1 by Sacramento Appraisal Blog

Example 2  –  10625 Ambassador Drive: This renovated property sold at $194,000 in MLS, but Zillow assigns a Zestimate of $160,500, which is 17% less than the sales price in MLS. For reference, there were six offers on this property when priced at $189,800 in only four days of market exposure.

Zillow Sale 2 by Sacramento Appraisal Blog

Example 3  –  10504 Ambassador Drive: This house sold in only 9 days of market exposure and had 9 offers total. This property sold at $187,000 in MLS, which Zillow acknowledges, yet they still assign their Zestimate as $160,500, which is 14% less than the sales price in MLS. For reference, this property sold previously as a bank-owned fixer in the past six months, and was since rehabbed throughout.

Zillow Sale 3 by Sacramento Appraisal Blog

What can we learn from this situation?

  1. A machine can only do so much to value properties. The humans win in this case.
  2. Zillow doesn’t always do so great when the market is segmented like this neighborhood. There is a huge value difference between foreclosures needing fixing and renovated arms-length sales.
  3. Kudos to Zillow for recognizing that there is a difference between sales price and value. While their values are unfortunately way off in this instance, many in the real estate community confuse sales price with value. A sales price may or may not be the same as value.
  4. Real estate markets are complex and not easy to interpret – even for humans. The market has been changing quite a bit over the past few months as inventory has decreased in the Sacramento area. Zillow is not capturing this change for these properties at least.
  5. Find local real estate specialists you can trust. So many people sincerely rely on online valuation websites. “But Zillow says….” is a very frequent response to hear from home owners because they had a level of trust in the accuracy of data found there. I’d simply say to take the online sites with a grain of salt.
  6. Look up Zillow accuracy tables on their website and you be the judge if the margin of error is reliable enough for you. I recommend reading the definition of “median error” at the bottom of the accuracy page.

As an appraiser, I don’t have a beef with Zillow at all, and it’s not my mission in life to get others to not use them either. In fact, one of the things I like about their website is the historic graphs they provide in the data section. This was simply an FYI post for consumers.

What do you think?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

10 Appraisals vs. Zillow

By 8 Comments

I have a friend who loves Zillow. He checks it regularly because it helps him feel like he is staying up on market trends in the neighborhood. Based on the following comparison between appraisals I completed recently and Zillow value estimates, what advice might you give to my friend? The parenthesis below indicate the percentage by which Zillow differed from my appraisal.

  1. Lincoln home: Appraisal: $255,000;  Zillow: $262,000 (+2.7%)?
  2. Sacramento condo: Appraisal: $105,000;  Zillow: $159,900 (+52.3%)
  3. Rancho Cordova condo: Appraisal: $40,000;  Zillow: $48,100 (+20%)
  4. Elk Grove home:  Appraisal: $215,000;  Zillow $180,000 (-16.3%)
  5. Rancho Cordova home: Appraisal: $143,000; Zillow: $161,600 (+13.0%)
  6. Roseville home: Appraisal: $285,000; Zillow: $278,000 (-2.4%)
  7. Curtis Park home: Appraisal: $550,000; Zillow: $705,400 (+28.3%)
  8. Citrus Heights home: Appraisal: $135,000; Zillow: $151,800 (+12.4%)
  9. Sacramento home: Appraisal: $101,000; Zillow: $105,000 (+3.9%)
  10. Carmichael home: Appraisal: $280,000; Zillow: $322,000 (+15.0%)

My conclusion? It’s really hit and miss with Zillow. I wouldn’t recommend relying upon Zillow for any concrete decisions, but it is still a useful tool. Zillow is often a good place to start for neighborhood information, historical graphs and to get a general idea of what other houses have sold for recently. I would just be very cautious to give strong weight to Zillow’s value conclusion.

What do you use Zillow for? What advice would you give to someone about relying upon Zillow estimates?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook.