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Beware of the Zestimate

By Dana Hollish Hill

Real Estate Agent with Hollish Hill Group, JPAR Stellar Living

February 09, 2015 03:25 AM

Today I received the weekly newsletter from my local real estate association, The Greater Capital Association of Realtors (GCAAR). The subject line was "Beware of the Zestimate." I clicked through to a Washington Post article titled "Zillow offers estimates of your house's value. But the error rate can be high." by Kenneth R. Harney.

The article discusses how the CEO of Zillow states publicly that the margin of error of their Zestimate home values averages 8% nationally. Of course this means that some areas are off by a lot more. Can you imagine admitting that your product was off by 8%? Although in DC Zillow was unable to calculate their margin of error. You can click through to read the article, but be sure to read the comments as well. I found them as telling as the piece itself.

Some comments are from the public who defend Zillow saying that the Zestimate is a starting point, just like the listing price from a listing agent. They ask how many homes sell for the exact list price. It is clear that they distrust real estate agents the reason for the objection to the zestimate is strictly based on competition. Which is funny to me because I am an exclusive buyer agent at an exclusive buyer agency where we take no listings. Most complaints I've heard about the big online real estate sites are related to the fees they charge to those who list.

Should we beware of the zestimate or embrace it?

As much as we, as real estate professionals, try to explain to the public that the Zestimate is not to be trusted, it is a site that the public chooses to believe. While the article, and some of the comments from real estate professionals try and explain why the Zestimate can be a real life problem, I'm not sure the public hears this message.

As an exclusive buyer agent, I love it when my clients do research online because I believe the more information the buyer has, the better informed their buying decision will be.

What do you tell your clients when they put all of their faith in the zestimate?

If you are thinking about buying a home in the DC Metropolitan area, give me a call to Get Started.

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Rob Marken

Bend River Realty - Bend, OR

25+ years experience in Bend

Very interesting. I agree that sometimes the Zestiment can be off by quite a bit. Thank you for sharing.

Feb 09, 2015 03:35 AM

Will Hamm

Aurora, CO

Will Hamm

Hamm Homes - Aurora, CO

"Where There's a Will, There's a Way!"

Hello Dana Hollish Hill, I see that they are off by so much and clients think they are on target, wrong.

Feb 09, 2015 03:42 AM

Dana Hollish Hill

Hollish Hill Group, JPAR Stellar Living - Bethesda, MD

REALTOR * Broker * Coach

Rob - They sure are. My home has fluctuated by more than 46% in a single day. I was I could have bought low and sold high that week.

Will - In the past, I have had issues with buyers believing that the assesssed value is the market value, but some buyers and sellers seem to put a lot of trust in the zestimate. Scary.

Feb 09, 2015 04:10 AM

Tanya Van Blake-Coleman

Van Blake-Coleman Realty, St. Thomas/www.talk-to-Tanya.com - St Thomas, VI

Improving the Quality of Your Life

Dana thank you for sharing. I have seen this as a common theme and I am surprised they haven't got the Zestimate errors fixed with all of the misinformation it can spread. Good luck.

Feb 09, 2015 04:42 AM

Victoria Ray Henderson

HomeBuyer Brokerage - Washington, DC

Washington DC Real Estate

Dana you are right on target!Thank you for bringing this article to the Active Rain community. I really appreciate your insight on issues.

We have to explain the Zillow Zestimate to our new clients who feel they can trust Zillow.

Feb 09, 2015 05:09 AM

Potranco Realty

Potranco Realty - San Antonio, TX

"Sold with Potranco Realty"

Dana, this is a great blog thanks for sharing your findings. Our buyers and sellers need to be educated on these crazy Zestimates.

Feb 09, 2015 05:31 AM

Kathleen Daniels, Probate & Trust Specialist

KD Realty - 408.972.1822 - San Jose, CA

Probate Real Estate Services

Dana, I tell clients it is not a reliable source. That only data from the local MLS married with my knowledge of the market will realistically target a home value. There is so much more to it!

Feb 09, 2015 09:19 AM

Tanya - I know what you mean. I was shocked that the CEO admitted it has an average 8% error so casually.

Victoria - I usually encourage buyers to research online, but to recognize the strengths and weaknesses of each site. They usually ask my what I think of their favorite site and I tell them.

Feb 10, 2015 01:15 AM

Bob - I was shocked by how many hits Zillow was getting. People seem to like the site even if it is not completely accurate. Especially if the zestimate is a number that is in their favor.

Kathleen - There really is so much more to it. I tell my buyers that the list price the listing agent and seller offer is a starting price based on an opening move in their pricing strategy and that it's based on the local market and expectation.

Feb 10, 2015 01:18 AM

Alan Kirkpatrick

Austin Texas Homes - Round Rock, TX

Alan in Austin

Dana:

Good post. I find it rare in our area where the Zestimates are even close. They are usually off by more than 30000 at a minimum.

Feb 11, 2015 04:17 AM

Alan - Thanks for your comment. I watched my house price fluctuate by 46% in one day. That's when I knew that there were some problems with their math.

Feb 11, 2015 11:26 PM

Beware of the Zestimate

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