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ZEstimate: Explained But Still Not Understood

By
Real Estate Broker/Owner with State Wide Realty Co. 0225108792

 ZEstimate: Explained But Not Understood

Over 88% of real estate buyers will use the internet during their property search. This is no secret, in fact most people in real estate use the internet as a resource these days. The real secret is how much agents and buyers understand the information we gather - for example who really understands the Zestimate??  Zillow does a pretty good job of explaining this feature on their site, but let's be honest who really looks?


What is a Zestimate??

If, you have ever searched for property on Zillow.com you've probably seen their home details pages. Did you notice in the left hand corner, just under the price the Zestimate??

Almost Equal to List PriceChances are if you're like most buyers, you might think this is what the property is worth. Not quite. This is the "Zillow's estimated market value, computed using a proprietary formula".  Zillow recommends this value as a "starting point in determining a home's value". The site goes on to recommend consulting a real estate agent, getting an appraisal and visiting the home to determine their own opinion of value.


How do they determine the Zestimate value?

Well, I don't work for Zillow so I'm not privy to all the ins and out of the process but they do give us the gist. Basically, they take "zillions of data points" from public information....plug them into the formula .....and presto you have their Zestimate


How accurate is a Zestimate value?

Prince Edward Co. - Tax assessor's value or unable to compute accuracy.

According to Zillow, the answer depends on your location. The accuracy of their Zestimate is dependent upon the data they are able to obtain from the localities. To help aid the buyer in determining the reliability of the information Zillow has a chart with star classification.  Be sure to click over and check out your area to determine how reliable the data is before you try to base an offer on a Zestimate.


What does this mean in South Central Virginia?

As for my area we rated one star which on Zillow's scale means "tax assessor's value, or unable to compute Zestimate accuracy" or more simply put poor.

It is my understanding that Prince Edward Co and as well as the surrounding counties do not submit enough information to enable Zillow to compute an accurate value....so they rely predominately on tax assessments. Resulting in wildly varying Zestimates (as displayed in photos).

Not as far off as some....still lost the buyer!

Whoa....way off!

 

 

 

 

 

 

 

 

 

 

 

 

 

My advice, if you're interested in a property on Zillow.....check the reliablilty of the Zestimate before giving it much consideration or better yet, take Zillow's advice and consult your local Realtor.


Realtors, what do you think of Zestimate? Do you agree with Zillow's assessment of your area's Zestimate accuracy?


 

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Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Larry * I am taking a copy of the RENTAL Zestimate with me on rental property presentations so that I can explain in case the homeowners want to use that as the basis of their proposed rent....it is usually very low.

Feb 27, 2012 05:22 AM
Laura Allen, Lake Tahoe - Truckee Real Estate for Sale TahoeLauraRealEstate.com
Coldwell Banker Realty, Tahoe City, CA (530) 414-1260 - Tahoe City, CA
Tahoe Real Estate Agent Helping Buyers and Sellers

Larry - Great insight into how the Zillow Estimate is calculated.  In our state Zillow relies on the property tax information and since re-assessment in value only happens when ownership is transferred, or sells the estimates are often very inaccurate.  Real estate is local and you need to be working with a local real estate professional.  Great blog!

Feb 27, 2012 05:26 AM
Lang Premier Properties
Lang Premier Properties - Clawson, MI
Metro Detroit Real Estate Group

Gotta love those Zestimates!!!  Thank you for the post, I did one a year or so ago when i kept getting the objection, "Well Zillow said my home was worth $.."

I love everyone's takes on this subject.  Makes me chuckle. 

Keep up the great work, Larry!  

Feb 27, 2012 05:30 AM
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

It just goes to show, we can figure out anything we want to, but we tend to use (as newbies) to use those tools that give us the best hope (aka the highest price).

Feb 27, 2012 05:36 AM
Larry Atkins
State Wide Realty Co. - Farmville, VA
Veteran Owned & Operated

Wallace - I haven't had any problem with the Rental Zestimate but I'm sure it's only a matter of time.

Larua - I'm pretty sure ours is some sort of avereage of the tax assessment, after speaking with a Zillow representative....but still that can be very misleading to the buyer.

Benjamin - I know this is an old issue for some AR members but it's just now emerging in our area, so I thought a post was in order. Thanks for stopping by.

Feb 27, 2012 05:39 AM
Larry Atkins
State Wide Realty Co. - Farmville, VA
Veteran Owned & Operated

Carol - Exactly, I had someone want me to reduce the price on the Crestview house pictured above... due to a Zestimate. Bet no one calls wanting me to raise the price to match Zestimate on the Monroe St. house.  

Feb 27, 2012 05:42 AM
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Larry  Zillow is a joke here in Northern Virginia - I recently had a call on a listing that closed two years ago.  

Mar 01, 2012 06:36 AM
Larry Atkins
State Wide Realty Co. - Farmville, VA
Veteran Owned & Operated

Karen, I think most Realtors in our area have the same opinion. Unfortunately, buyers who start online don't realize they are not a voice of authority and frequently have inaccurate information. 

Mar 01, 2012 10:04 PM
Roy Kelley
Retired - Gaithersburg, MD

Good post, Larry.  Zestimates are interesting to follow and are good indicators in some areas.  A broker price opinion or and appraisal will provide much more accurate information.

Have a wonderful weekend, with your camera in hand.

Mar 02, 2012 10:31 PM
Anonymous
Debbi Brawley

We are experiencing major problems with these auto valuations in our resort market.  Our lakefront and riverfront homes are being compared to off-water home sales and someone not familiar with our market would not know this.  The end result is that our waterfront homes are being shown as way above market value by these internet companies like Zillow, Trulia, Hot Pads, etc.  I think this is extremely damaging to our market and is probably affecting sales in our area.  However, I am finding most people are not aware that this is going on. 

May 01, 2012 08:15 AM
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