Homebuyers and Homeowners alike use the internet to search, value and try to make sense of the Real Estate market. But, users beware, the oh-so-popular Zillow is NOT what its cracked up to be.....if fact it's pretty close to completely useless information. Here's why:
Accuracy. Zillow has been criticized beyond belief for their inaccuracy. Well it isn't without good reason. Accuracy indicators for each local area are posted on the Zillow site here: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm
If you look at Phoenix the median error is 14.4%. That means 1/2 the homes valued by Zillow are off by more than 14.4%. That also means that only 20% of homes sold are within 5% of their value. I would be a pretty terrible agent if the homes I valued for my clients had this type of inaccuracy. I might need to find another line of work.
Actual case in point, I sold a home valued by Zillow for $75,000 above the Zestimate. That is more than 15% inaccurate. The reason is clear to me. Zillow took comps from a tract home development and used them to value the neighboring custom home community where my listing resides.
Zillow is like any other internet company, they NEED to drive traffic to their site and create a buzz to get you to visit. And often they do this by making bold statements such as a recent one that reported 70% of mortgages in Phx are underwater. It is very true that Phoenix Area Real Estate was one of the hardest hit in the housing crisis of course, but this statistic somehow groups all underwater mortgages together: those that are just $100 underwater (and can be sold with a small loss to the seller) and those that are $300,000 underwater (those that would have to short sell) Interpreting this kind of random number can be misleading. (I call it random because I have yet to understand how Zillow came up with that 70%).
Real estate brokers everywhere love to joke about those pesky Zestimates and I do admit I cringe whenever a client tells me, "Are you sure, 'cause that's not what Zillow says my house is worth?"
I even have a client who depressingly checks in on his Mesa, Az home Zestimate weekly-of course it too has been giving him totally inaccurate values all along...and could there be a physiological disorder for homeowners obsessed with their property value?...well that might be a discussion for another day.
The best and most accurate property value comes from information taken directly from local Multiple Listing Services (MLS) interpreted by local and knowledgeable real estate agents and brokers. There's just no substitution.
Comments (5)Subscribe to CommentsComment