Zillow That Pesky Website

By
Managing Real Estate Broker with Arizona Real Estate Options

laura Higginbotham short sale foreclosure expert

 

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)

Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

I have checked it for general trends and look for other information, but never use it for and accurate source for prices.!

Feb 15, 2011 08:19 AM
Tricia Hoffmann
Your Home Free - Highland Village, TX

It really is a problem.  I checked out my house just to see what it would say and wow, what a crock o' crap!  They were using about 50 homes and used homes that were 1000 sf smaller than mine and over three miles away.  

That is a real issue for sellers who in their mind may think their house is worth $200,000 and then Zillow says $230,000 and an agent shows MLS data that is accurate and a good, solid comparable at $190,000, a lack of trust factor is immediately out into play.  A seller bows up and thinks their house is worth more because ONE website says so.  That's like reading ONE article in a magazine about one British study that was done with 10 subjects showing that vaccines cause autism.  You know how that turned out!

Great post!

Feb 15, 2011 08:29 AM
Marcie Sandalow
Marcie Sandalow, Compass 301.758.4894 - Bethesda, MD
Bethesda Chevy Chase DC real estate

Zillow can be a pesky problem... but keep repeating your mantra: "The best and most accurate property value comes from information taken directly from local Multiple Listing Services (MLS) interpreted by a local and knowledgeable real estate agents and brokers.  There's just no substitution."  I have a similar spin. And it's beginning to sink in.  I lost one buyer because she really didn't believe me, but aside from that most people get it.

Feb 15, 2011 08:41 AM
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

We see it as a problem as well. The MLS is my #1 most trusted tool. Thanks for sharing your thoughts on this issue

Feb 15, 2011 11:31 AM
Laura Higginbotham
Arizona Real Estate Options - Mesa, AZ
Broker/Real Estate Consultant, Mesa, Arizona Home

Thanks for the comments. I know I'm not alone :)

A colleage of mine once wrote a blog and just mentioned Zillow (in a non-flattering way) and one of the execs at Zillow actually found it and commented that the site isn't really meant to be accurate or replace real estate agent advice.

Uh,  could they let the consumer know?

Thought that was funny.

Feb 15, 2011 11:33 AM