People ask me sometimes what I think about websites like Zillow or Cyberhomes. In short, I don’t think computers do as good of a job appraising properties as real humans. Call me biased, but there are some things that real people can still do better than machines. However, though these websites cannot fully replace real estate appraisers, they do have a place to help gain a ballpark figure for a house (please take that with a grain of salt though because figures can still be way off). Additionally, I’m a fan of the multi-year trend graphs that Zillow produces.
The Sacramento Bee actually published an article last Friday about this very topic entitled Home Front: Appraisal sites on Net often fail to pin down accurate prices. The bottom line is that websites like Zillow seem to have greater accuracy in tract markets with ample sales, but even then they are only so good because they cannot sift through value indicators like condition, important neighborhood boundaries, upgrades, and a local appraiser’s knowledge of the market area.
I ran some test cases over recent work I have done and found the following:
– My house (tract): Zillow was 28% high / Cyberhomes was 24% high.
– Elk Grove house 2.0 acres: Zillow was 46% low / Cymberhomes had no value.
– Tract House in Davis: Cyberhomes was 4% high / Zillow was 2.5% high.
– Sacramento River property: Zillow was 40% low / Cymberhomes had no value.
– Tract House in Galt: Zillow was 9.5% high / Cyberhomes was 5.0% low.
What do you think of these websites? What do you think they’re useful for? Do me a favor and run your property by Zillow and/or Cyberhomes and let me know the results.
Hey Ryan- I agree with you, AVMs have their place (a nice place to anonymously start researching), but ultimately one should use a professional if you are going to make a major financial decision.
Did you know we actually post our accuracy rates, by county here:
http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm
(link at the bottom of every page on the site)
Well said Sara. Thanks for the comment. I’ve noticed that Zillow is quite on top of responding online to articles like this. That’s a good strategy and my guess is that you have Google Alerts that tip you off to what people are saying. Kudos to you.
Regarding accuracy, it seems to be hit and miss. I followed your link. It makes sense how you determine your accuracy rate, but I do wonder how you take into consideration the distressed market and if there is any way you distinguish between REOs and Short Sales.
Great post, Ryan. We found sites like Zillow.com to be very useful in finding our home, although personally, I am not fond of Zillow as the home prices seemed to be off in most cases just as the information is either outdated or simply not updated quick enough to see the newer properties, and the format just bothers me. In Southern California, we have a site called “Redfin” that works wonders, and even has an iPhone app. This is actually the site that I used to find our recently-purchased home, our found-on-iPhone-home, that is.
On a side note, surely you can remember what it was like to be a new homeowner and how every home service industry professional and their mother would come out of the woodworks to sell you something, whether it be shutters, insurance, or home security. So yesterday, a couple of fellows from a nationwide home security service showed up at my doorstep, and interestingly, they told me that they used “Redfin” to find our home by selecting “Recently Sold,” which I think was also designed to scare me into signing up for their service, with the thinking being: “If they could find me on Redfin, then everybody else can too!!” So this is yet another use for the app: soliciting business!! Maybe you ought to try it as well?? 😉
Thanks for your thoughts, Cory. It’s interesting to hear a comparison between Redfin and Zillow. That is a bit creepy for them to show up at your house. I have a standard line for alarm salesman who knock on my door every few months: “No thank you. My family is very well protected”. I let them interpret what that means. 🙂 They usually just smile because there is really nothing else for them to say.
I think the foursquare app is a good way to connect with people too, that is, if you have an office where customers frequent. It’s intriguing to think of the ways we can find potential business and connect with customers with the advent of new technology. Hopefully businesses can acheive that though without coming across as some sort of stalker.
BTW, Zillow underestimates the value of our home by 48K compared to what the home appraised at during escrow just a few weeks back (human appraisal) and Cyberhomes is over 20K less than where Zillow is at. I think that I may side with Cyberhomes if that will help us save on property taxes!! :p My conclusion: there is still no replacing human appraisers!!
I love your conclusion: “there is still no replacing human appraisers”. Thanks Cory.
Ryan, your post is right on. I have talked with people in the past about the accuracy of Zillow. Their data is very dependent on the accuracy of the county data which, as you know, can be way off. As Sara said though, it can be a good starting point. I did not know about the accuracy rates, that is interesting.
Thanks Tom. It’s interesting when you actually click on the link. The first few columns of the accuracy table say 99% and such, but when looking at the heading, that stands for 99% of homes in the county that are listed on Zillow. It’s good that they have most of the data in the area apparently, but the actual stated accuracy rates are a much different story. For example, in Sacramento County they state that 45% of homes sell within 10% of their estimate, 70% of homes within 20% of their estimate, and 25% of homes within 5% of their estimate. Their stated median error is 11.4%. In some senses, these numbers are a valuable starting point, but at the same time being off by 10%+ across-the-board overall (up or down) ought to cause caution for the reader.
I actually have a neighbor who LOVES Zillow. He spends a good amount of time on there and he asks me questions from time to time about certain houses that were listed (like a foreclosure transfer that was not a sale).
I followed this article from the realestateappraisetips.com website. Glad you took the time to post some real commentary and real numbers.
I did something similar back in July, for a home in my area (Austin, TX):
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Is a Free House Appraisal A Good Measure of Market Value?
July 23, 2010 By Alison Shuman Masis Leave a Comment (Edit)
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Free Appraisals Are not a good Measure of House Value
A Free House Appraisal Sounds Great!
Until you realize that the value provided by “instant” or “online” house valuation services isn’t a good indicator of the value of your home.
Before you pop off this page, think for just a minute about what you really need.
Are You Looking for the True Market Value of Your Home?
Or are you just killing time waiting for the movie to start?
Home Valuation Sites Vary in Values Provided
Let’s play a little game. Let’s visit a few of the on-line websites that offer information on house values and see how the numbers compare.
For this game, we’ll use a house on Leafwood Lane in Austin, Texas, 78750. This is a 2902 square foot house in Northwest Austin. Although all of the information below is from the public records, we don’t feel comfortable sharing the actual address.
* According to the Travis County Central Appraisal District, this property has a tax assessment value of $333,962.
* According to eppraisal.com, this house is worth $338,672.
* According to CyberHomes.com, this house is worth an estimated value of $353,124, with a range of $317,811 – $406,092.
* According to Zillow.com, this property has a tax assessed value of $348,618. Note that this value doesn’t match the actual tax assessment value obtained directly from the taxing district.”
Let’s keep the machines from running over the humans!
oops, didn’t mean to post the whole thing, was just trying to add a snippet. Kill the comment if you need too. 🙂
No problem at all. Thanks for sharing. I’d be curious if this was a house you appraised, and what the appraisal came in at. I find tax assessed values to not be a good indicator of value in my neck of the woods (Sacramento County, Placer County…). Take care.
We didn’t appraise this one, but I think you’re on to a good thing to post regularly about – the difference between the current appraised value and the number in the auto valuation sites.
I just recorded a podcast about the difference between a tax assessment and an appraisal – another topic we could all write a LOT about to get the word out there.
How transparent is the tax assessment process where you are?
The Sacramento County Assessor posts tax assessments online, so any homebuyer can check out their property assessment each year. That’s a nice feature. In terms of accuracy, in my experience acting in the role of a a property tax consultant (I run http://www.SacramentoTaxAppeals.com), it’s very common to see overassessed properties in Sacramento County (and surrounding counties).