The entire ruckus started with an email from Zillow .....

By
Real Estate Agent with RE/MAX Suburban

Minding my own real estate business when out of the blue came an email from Zillow telling me my Schaumburg Market Area here in Northwest Chicago had decreased 5.3% and had I been aware of it?  WHAT?  CUMON!

I knew the market was in a slight downturn but 5% a quarter in the Midwest?  Seemed suspicious but I left it aside and thought nothing further about it.  But it stewed and stewed in my head!  How did they come to find those numbers?  How could I verify those numbers that were being spread thru the internet like a bad case of athlete's foot?  How could I keep my blood pressure down!

A little background here first.  I have always been suspicious of Zillow and their numbers and on two different occasions have found them faulty and downright ficticious with available listings in my market area.  Duplicates, padding, going outside the area and including them in specific 'high hit' zip codes - naw, that doesn't happen with Zillow!  Yes it's true - that's what I found on two separate occasions.

SO NOW THIS!  After a bunch of exhaustive research this is what I've found.  Using our MLS solds for the 1st quarter of 2008 this is the scoop.  (Nudge yourself if you fall asleep during the numbers presentation).

Sold Volume May 2007 - $10,604,700     Sold Volume May 2008 - $20,202,201     -402,499 or -3.8%        Down 3.8% FOR THE YEAR   This is only off by $403,000 which is about 1.25 homes in my market area.  SO THAT'S NOT BAD!

Average Sold Price May 2007 - $342,000    Sold Price May 2008 - $319,000      - 7%     Down 7%  BUT WAIT, WHAT IF MORE LOWER PRICED HOMES SOLD WOULDN'T THAT BRING DOWN THE AVERAGE PRICE.  I had thought that first-time homebuyers were spurring on the market here and according to these numbers I think it's true. 

# of Units Sold  May 2007 - 31           May 2008 - 32       I'm not even going to bother figuring this out it's so minuscule.   SO THAT'S NOT A DECENT PERCENTAGE THAT ZILLOW COULD HAVE USED??

Lyn Sims (847)230-7324Hmmm.  Where does Zillow get the numbers?  I have all the closed sales with fairly certain accuracy from the MLS here in the area.  What does Zillow use to tout these numbers?

The email also went on to tell me how I should help sellers set realistic prices for their home using Zillow!  Yikes - but where did they get those numbers!  I've got numbers too and nothing matches up!  

Working my fingers and pencil to the bone I have come up with one conclusion - THEY MAKE THEM UP!  That's what I think and my pencil proves it.  Why not try it in your market area & see if it isn't true for you too? 

What's truly sad is the public is not aware of this scam.  It's a plain and simple "information" scam that the public doesn't realize yet.  You can provide all sorts of numbers, statistics, and whatever fancy graphs you can chart but they are of no effective use to Mr. Public.  Mr. Public just wants those numbers that the shifty realtors are hiding from them, so in steps Zillow.

SCAM.  The site just doesn't work. 

So folks I've posted what and how the market truly is in my area.  I've got numbers too!

 

 

 

 

 Lyn Sims BlogLyn Sims at RE/MAX Suburban (847)230-7324

Northwest Suburban Chicago Areas of Schaumburg, Hoffman Estates, Elk Grove Village, Roselle, Medinah, Itasca, Bloomingdale, Hanover Park, Streamwood, Bartlett, Elgin, South Elgin, St. Charles.

 

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lyn sims re/max suburban

  Lyn Sims    Schaumburg IL Area    Northwest Chicago Suburbs  ●  (847)230-7324
 
 
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Comments (58)

Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Thank you Courtney for your comment I wasn't aware they had mapping features.  I am still asking HOW THEY GOT THEIR NUMBERS? 

Jun 07, 2008 02:43 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Jim Lee:  Thank you for your comments - that is my point exactly THEY DO NOT have my MLS statistics.  So 80% of their numbers are ascew as realtors do 80% of the sales?  That's kinda my point.  I - having the MLS sales have a greater number of accurate information than they do.  Again, they will not mention where they get their information from.  I am assuming tax records or anything else they can get their hands on 'feed' wise.

Jun 07, 2008 02:54 PM
Elaine Reese, REALTOR® in central Ohio
Real Living HER, Powell Ohio - Powell, OH

Oh, Lyn, your last comment on "how they got their numbers" really puts an image in my head (chuckle, chuckle), and certainly there is clip art somewhere to reflect it ............. but then it wouldn't be a "G" rated blog. ;-) 

Jun 07, 2008 03:03 PM
Pam Jank
Coldwell Banker Schneidmiller Realty - Coeur d'Alene, ID
Your Coeur d'Alene & North Idaho Real Estate Pro

Yes, I agree!   I have spent way too much time having to prove to my Clients that their property is NOT worth what Zillow quotes. 

Only a Real Estate Agent that knows the local market and does a comparable study can give an accurate valuation.

We have the same problem with "National Statistics."  Each market area has been affected differently.  Some have had more depreciation than others.  Some are still flat... some are selling rather well... etc... etc... etc.

That is why they need us.  We give our Buyers and Sellers the actual facts for our locality.

Jun 07, 2008 05:31 PM
Pippa Mac
Chevaux Group Realtor, The Woodlands and Spring - The Woodlands, TX
The Woodlands TX Real Estate

 

My client believed his house was almost $500,000 (yes, half a million) over the actual value due to that website.  It took alot of time to show him actual values and sales.

Jun 07, 2008 06:43 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

John Novak:  I verified all numbers before posting this piece so I wouldn't be considered IRRESPONSIBLE.  They were verified by others in my office & other stats were left off just to keep the 'numbers' portion down to a minimum for easy reading & to show the drastic differences in results.  Thank you for your perspective John.

Jun 08, 2008 01:58 AM
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

Wasn't this post featured, and now it is not?  Am I crazy?  Zillow is interesting, I had buyers who thought they were being aggressive on an offer this spring because of numbers they saw on Zillow until I showed them the actual CMA.  The homes were close together, but not the same size, and amenities.  They went with my CMA instead :)

Jun 08, 2008 01:59 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Pam:  That's also one of my points - we have to spend so much of our valuable time providing the correct numbers to either buyers or sellers depending on our situation.  We have the BEST data and yet have to PROVE our numbers.  Zillow gets to collect all kinds of advertising revenue & spew (a computer spewing out unknown) numbers at the public and then they do not have to prove credability to the public. 

 

SOMEONE MENTIONED THAT THIS WAS A FEATURED POST & NOW IT IS NOT??? NOT SURE HOW THAT HAPPENS, ANYONE KNOW?

Jun 08, 2008 06:54 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Other great Posts on Zillow:

Lenn Harley Post

Rennee Burrow Post

Just in case Zillow thinks that I am the only one with a poor opinion of them, please see these other posts & I am sure you will then agree that Zillow's numbers aren't the only thing people are complaining about.

Previously I have posted one of my listings on Zillow only to have a low 'zestimate' done on the property (20,000 low).  When I tried to get the 'zestimate' upgraded/overturned/pleaded upward for a higher price which was proven by the MLS sales comps, Zillow REFUSED to correct any of the information.  They told me that any information entered cannot be changed.  That is when I dedided to say "adios Zillow".  I just didn't need to get ''screwed by the Z' so to speak.  I manually put in my listings & they tell me what they are worth?? Before they sold??  No comps from them??  That's the kind of stuff I've had to deal with from these folks. 

I welcome all your opinions and thank you for a spirited discussion.  As someone said, this reminds me of the debate team.

Jun 08, 2008 07:35 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Have just gone thru the "Zindex" sent to me from a Zillow advocate on how they arrived at their numbers.  HERE WE GO AGAIN.  The numbers include the City of Chicago(30 miles east) - Naperville (20 miles south) - Joliet (45 miles south) - WISCONSIN (the entire state) - INDIANA (the entire state).  Now that's some 'Zillow' territory!  I can't describe to you all on AR how large that territory is!!  Real estate in local - you cannot include the entire state of Wisconsin and then send me a deprecation rate from a town not even in that state.  Does anyone else find this odd?  How about 'Zanny".

 

 

Jun 09, 2008 03:02 AM
David Gibbons
Zillow.com - Seattle, WA

Lyn -

Please take a closer look; again you are jumping to all the wrong conclusions.

If you click on the link to Zillow's data in the Schaumberg MSA you will notice that we do in fact report home value trends at very granular local levels. Home values are reported for each County, City, Neighborhood and ZIP code in the MSA. Here's that link again.

Also; did you notice that Zillow is reporting annual appreciation and not quarterly? I would really appreciate it if you could update your post to correctly address this.

Jun 09, 2008 03:51 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

AR Piece from the newsletter - Unexpected April Pending Sales Increase

Jun 10, 2008 05:16 AM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Still havent got the question answered eh?

Jun 17, 2008 07:54 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

No answers yet on where those numbers come from. Still waiting.

Jun 17, 2008 09:05 AM
David Gibbons
Zillow.com - Seattle, WA

Lynn - so sorry - I thought I explained where these numbers came from in my reply to Denise & Bob above.

The quarterly home value reports that Zillow publishes are our estimate of the annual change in the value of the median valued home in the area in question. To calculate the change in value for zip codes, neighborhoods, cities and counties, we use the median Zestimate value. For MSA's we use a weighted calculation of the value from the counties (weighted according to the number of homes in each county.) If you need more background on how Zestimates are calculated, you'll find it here. The strength of this approach is two-fold;

  1. it considers the change in value of all homes and,
  2. being a median, it excludes any outliers in the estimate data.

So, how does Zillow's method compare to traditional methods for calculating home value trends? There are two more or less standard approaches to reporting home value trends; index calculations and median sales value analysis. There are two blog posts I recommend reading that answer those questions. First, Zillow's home value reports correlate very closely with the Case Schiller index but not with the OFHEO index (for good reasons.) In the next post, Dr Stan Humphries explains why the traditional median sales price analysis is often skewed by the constant change in the mix of the types of homes that have sold.

Let me know if this information triggers any further questions.

Jun 17, 2008 11:28 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Yes Lyn, as the market here was changing I had a seller that insisted he was well read when it came to HIS price and more informed than me. I agreed tot ake the listing thinking he'd get a little more realistic but Zillow already had him barin-washed and this made working together difficult because the seller was using inflated stats.  

Jun 17, 2008 11:38 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Thank you Carol for your response & telling your experience with an unrealistic Zestimate.

 

Thank you David for the explanation on the median price which I completely understand. I would like to know the feed, the subject data that you compile those figures from.  Tax records? County sales records? Just the total sales number used to calculate that median value?  In other words, how many total homes closed each quarter?  EX. 1st quarter of 2008 - 207?  350?  450?

 

 

Jun 17, 2008 12:50 PM
David Gibbons
Zillow.com - Seattle, WA

Lyn - yes, it's the County sales records and county tax records that are our starting point for all our calculations. And we also supplement that data with home facts supplied by agents and owners.

 

Jun 19, 2008 07:54 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Amen & Alleluia you've finally answered the question in this debate.

Jun 23, 2008 02:20 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Just an update to this debate.  Another interesting post from Jim Ludes with numbers you all might think intersting that I did not have.  Thank you Jim for your input.

 

Jun 29, 2008 07:53 AM