Why Zillow Does Not Work for Appraising San Antonio, TX Homes

         Zillow does not work for appraising homes in Texas. A research study conducted by University of Texas at San Antonio's business faculty members Daniel Holles, Ron Rutherford and Tom Thomson was published in the 2010 Winter issue of The Appraisal Journal  and the professors found that "it might be wiser to go trust the unenlightened shot in the dark from a mere human when it comes to estimating home values -- at least when it comes to Zillow."  Their study, "Zillow's Estimates of Single-Family Housing Values," compared Zillow's estimates to 2,045 single-family home sales prices in Arlington, Texas which was where Zillow claimed to have the most accurate data.

   Zillow, Inc operates a web-site that offers free estimates and other online tools for real estate buyers and sellers. What information is being used to arrive at  Zillow's Zestimates and how accurate are they? The Zestimate home valuation is Zillow's estimated market value computed by using a proprietary formula that takes into account sales prices for nearby homes that appear comparable, the size and physical attributes of the home, its past sales history and tax assessment data. In Texas, making estimates is not that easy. Public records that show housing transaction prices are not available.  The problem with relying on this formulated information is it leaves out many significant variables in appraising homes.

         Real estate is local. For example, is your San Antonio home in a new master-planned, gated community? Ranch, split level and Spanish-style stucco homes each have their own value. Are you looking at a maintenance free rock and stucco exterior Spanish-style home in historic Monticello Park in San Antonio or a lovely ranch surrounded by the rolling hills of the Texas Hill Country? Zillow can't tell you if you have granite, a pool, a deck or other significant details about your home that affect the estimate. 

         Running true comparisons is detailed. Zillow simply does not have all the data available to realtors and appraisers. To obtain an accurate appraisal you need to get a Comparative Market Analysis(CMA) from a real estate agent or appraiser who truly knows the area. Your local San Antonio agent knows the neighborhood street by street. He can also filter out foreclosures, short sales, and distress sales to uncover the true market value.

As Mario Greco, one real estate broker puts it, with so much important information missing, "Zillow's estimates are no more reliable than the ‘fortune tellers’ at carnivals.” So just how inaccurate are they? A Zestimate for San Antonio, Texas shows an 18.3% median error, meaning the ‘Zestimate’ could be off by almost 20% in either direction! According to the San Antonio Board of Realtors the average sales price in January 2010 is $175,065. If we were to use Zilow’s Zestimate we could be off on the sales price by more than $32,000! This major gap between pricing shows just how inaccurate Zillow can be when appraising your San Antonio home.