How Accurate is a Zestimate?

By
Real Estate Agent with Progressive Realty (Boise Idaho) www.Progressive-Realty.info DB-17066
http://activerain.com/droplet/59wt

Too many people assume if they see something generated by a computer formula or in print is has to be TRUE.  I think the last election process in the United States at least having people thinking more on the lines of "Trust But Verify".

There are lots of computer Automated Valuation Models that try to determine value ranges for a home.  There are so many variables, that I don't think automation will ever put a appraisers out of work.  Heck, if a Zestimate was so accurate, wouldn't they call them Zaccurates?

How would any system know about how much of a premium to put on a homes value due to the view it might have?  Maybe when it was built it had a great view, but maybe the neighbors trees grew and deleted the view?

How would a computer model know if there is a dairy a half mile away and the prevailing winds draft right though the kitchen window of the home?

These automated valuation models don't offer a scratch and sniff option to see if the house smells like cigarettes or cats!

How would they know if a seller was over motivated to sell and that comparable sale shouldn't be used in the valuation?  How would they know if it was even an arms length transaction?

Since I already said you should verify data, here is what Zillow has to say about their own accuracy ratings.  You to their website and follow these simple steps:

 

Zillow Zestimate Link

 

That will open this next page:

Zestimate page on Zillow

 

Now we are digging into fun stuff, the fine print!

Zestimate Excel Spreadsheet

When you clicked the link on their website above, it downloads the actual spreadsheet to show how THEY believe their own accuracy is per state or top metro areas.

Zillow accuracy rating for Idaho

 

Please notice that Zillow gives themselves a 1 out of five ranking based on the following definitions:

Zillow gives itself a 0 star rating for Idaho

Idaho is a non-disclosure state so Zillow and other automated valuation models like it don't get enough data to start with.  Feel free to use their website if you like, but as long as you realize they are an advertising website, not the Multiple Listing Service, things will come into focus.

Websites like Zillow are getting better for valuation, but check several sources including your favorite Realtor or Appraiser!

 

Hope this helps!

Jim Paulson, CRS, GRI, ePRO
Owner/Broker - Progressive Realty Corporation
Boise, Idaho
208-573-0471
GoOwnIt@gmail.com

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Rainmaker
283,703
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

Just to prove I am not picking on Zillow, here is a fun game to play.  Please pull up your home (or a current listing / sale) and post the differences on some of the online valuation portals.  Here is my results:

eAppraisal No value. $969,000 & equity assumed $666,700. (major joke as you will see below)

Homesnap $202,700

Realtor.com. $280,100

Redfin.com n/a

Remax $163K

Zillow $222,716

My home has a basement and most of these websites don't indicate that or provide any value for it.

There is a reason why Appraiser's have to be licensed and why the right Realtor makes all the difference!

Jan 27, 2018 08:57 PM #1
Rainmaker
2,557,377
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Jim I have written about their lack of accuracy for years, I sound like a psycho.... just an example two years ago I sold a house for $1.4m... and the Z sent my client the value around $2.4m... he is pretty savvy and does his own spreadsheets... and asked me if this is a "joke"??? and then I had to go into my 30 min discussion how they even admit that their numbers are worthless... On a side note nice to see you back, wishing you a superb 2018, Endre

Jan 27, 2018 09:16 PM #2
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Rainmaker
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Jim Paulson

Owner,Broker
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