The Ultimate Answer to the Zillow Zestimate
I get questions very often about the accuracy of the Zillow Zestimate. (For those of you saying, "huh?" right now, Zillow is a popular real estate website which gathers information from a variety of public sources to produce an estimate of property value they call a "Zestimate.")
Sellers worry that their listing price looks off in comparison. Buyers wonder why a home is listed higher than the Zestimate and try to lowball properly priced sellers based on this number.
My blogging colleague, Phil, in Westchester County, NY, has just written about this issue and I think he did it so well that I want to share it with my readers. What goes for him in NY, goes for me here on the middle coast in St. Louis' Illinois suburbs.
Here's the best piece of wisdom to take away from Phil's reporting: "If the Zestimate is the starting point...the licensed professional is the "Zactimate."
Phil goes on to explain: "It makes sense. There is no valuation algorithm that can smell a pet or recognize 1970 wood panelling in the living room. There is no formula to judge good or bad staging, a neighbor's yard with a car on blocks, or a rehab job that transforms a ho-hum place into a palace. Indeed, a Zestimate cannot drive the client around in its car, and it is...a starting point."
"The final word, the best source of predicting how the market will behave about a property is a living, breathing experienced licensee on the ground who can walk in the living room and look out the window. The Zestimate is an estimate. Period. It doesn't live, work, drive through, or close deals ...I am the Zactimate..."
Thank you for putting it together in an eloquent and understandable way, Phil. Please read on to see his complete post:
Perhaps no phenomenon in real estate is as much of a lightning rod for strong opinions as the Zillow Zestimate. Most agents I speak with hate it; I have had instances where looking it up has helped a deal and I have had clients walk from a deal because of it. The Zillow Zestimate has been the reason for sellers to feel under-priced or under-bid, and it has been invoked by buyers as the reason that they feel they overbid on a home. I once got so exasperated that I asked a client if a Zestimate ever drove them around Westchester County like I did when they used it to justify an unrealistic offer.
As you might guess, I have never associated the Zestimate with the easy button.
Yet today, I had an epiphany about the Zestimate with the great help of Zillow's outreach manager, Brad Andersohn. Brad's stature in my eyes is impossible to compromise; his credibility is beyond questioning. The Zestimate, Brad said as he spoke to a group of colleagues, is a starting point. Not an ending point.
Allow me to back up just a moment. Zillow's own disclosure on their front page about Zestimate accuracy is surprisingly candid. In my own New York market, the average margin of error of the Zillow Zestimate is 11.6%. They aren't trying to be something they are not.
Back to Brad- If the Zestimate is the starting point, he said, the licensed professional is the "Zactimate." What a way of putting it.
It makes sense. There is no valuation algorithm that can smell a pet or recognize 1970 wood panelling in the living room. There is no formula to judge good or bad staging, a neighbor's yard with a car on blocks, or a rehab job that transforms a ho-hum place into a palace. Indeed, a Zestimate cannot drive the client around in its car, and it is exactly what Brad says: a starting point.
The final word, the best source of predicting how the market will behave about a property is a living, breathing experienced licensee on the ground who can walk in the living room and look out the window. The Zestimate is an estimate. Period. It doesn't live, work, drive through, or close deals in Westchester County. That's what I do. As a broker who can sit at your kitchen table with my laptop logged onto the MLS and speak with authority on the town's market activity (homes I myself often walked through and even sold myself), I am the Zactimate. In this context, there is peace at the water hole. I thank Brad for stating it so eloquently.
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