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.
- Lincoln home: Appraisal: $255,000; Zillow: $262,000 (+2.7%)?
- Sacramento condo: Appraisal: $105,000; Zillow: $159,900 (+52.3%)
- Rancho Cordova condo: Appraisal: $40,000; Zillow: $48,100 (+20%)
- Elk Grove home: Appraisal: $215,000; Zillow $180,000 (-16.3%)
- Rancho Cordova home: Appraisal: $143,000; Zillow: $161,600 (+13.0%)
- Roseville home: Appraisal: $285,000; Zillow: $278,000 (-2.4%)
- Curtis Park home: Appraisal: $550,000; Zillow: $705,400 (+28.3%)
- Citrus Heights home: Appraisal: $135,000; Zillow: $151,800 (+12.4%)
- Sacramento home: Appraisal: $101,000; Zillow: $105,000 (+3.9%)
- 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.
Hit and miss…well mostly miss. I’ve always said that the algorithm for Zillow is way off. They choose the wrong comps, mostly too old from what I remember, so the conclusion is always wrong. Too bad, because all they have to do is do a few appraisals, check their site, and make some tweaks to their formula. You should send the president of Zillow a link to this blog to let him know.
Thanks, Sonja. I bet Zillow will find this post and comment at some point. They are usually pretty good about monitoring what people say online. Zillow, are you listening? What do you say to Sonja’s comment?
Hey Ryan – Brad Andersohn from Zillow here.
The advice I would give your friend is the same advice I give all my clients and friends too. Zillow is a starting point to gather information and data but is not a replacement for an official appraisal or a local real estate expert’s CMA or fair market value analysis.
Though our information and data is available and reliable on over 100,000,000 million properties across the US, we also rely on local appraisers and real estate professionals like yourself to help “friends” and “clients” get as close to the “local” fair market value as possible.
Thanks for posting this, you can always call or contact me directly if you have any similar questions like this in the future, or if I can be of assistance in any way.
Check out ZillowAcademy.com if you’d like to use some of the others tips, tools, and training we provide to industry professionals like yourself as well. Thanks. 🙂
Thank you for your response, Brad. I knew someone from Zillow would jump on here to say something. It’s good policy for companies to monitor what others are saying and respond accordingly.
I agree with you for the most part that Zillow can be seen as a sort of starting point, but it really depends on the property type. It seems like there is greater success in newer subdivision tract homes. I wonder how much weight Zillow gives to a listing price. It seems that when I see listings in MLS and double check what Zillow says, the price and zEstimate are many times the same. I do see listings posted on Zillow, so my suspicion is that agents that connect with Zillow enter their data in your system somehow.
Ryan – I forgot to mention that Elizabeth Weintraub in your area uses Zillow and converts many of the contacts she receives from Zillow into Clients or referrals. You may want to contact her and get some tips on how she’s maximizing the traffic and her local prospects that are visiting our site.
btw – yes, we do see everything that goes up on the web about Zillow and we take pride in trying to respond to every article.
Thanks, Brad. I appreciate the tip. She is a well-known local Realtor. I am glad local agents are discovering leads through your website. I know some agents do the same thing with Trulia. That is valuable and if I were an agent, I may consider doing the same.
For reference everyone, you can see the margin of error posted on the Zillow site at the following link. Sac County is listed at 8.8%, Placer 8.0% and Yolo 9.5%. According to their site, “Zestimate accuracy is computed by comparing the final sale price to the Zestimate on or before the sale date. The data herein is computed for the three-month period ending March 31, 2011.”
http://www.zillow.com/howto/DataCoverageZestimateAccuracyCA.htm
The way in which the zestimate is formulated is very complex and uses a wide variety of complicated algorythyms, data, and information etc, you’d almost have to be a rocket scientist to comprehend or even understand it.
Here’s an article that was posted recently that addresses the update and “Upgrading the Zestimate”:
http://www.zillow.com/blog/research/2011/06/14/upgrading-the-zestimate/
Hopefully this will help, thanks Ryan. 🙂
I have a background as a rocket scientist, so this is right up my alley (kidding of course). Thanks, Brad. I will check it out.