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Boulder real estate and Zillow's Zestimate: the dance continues

By
Real Estate Agent with Real-a-Save

The controversy continues with Zillow's Zestimate's vs. local agent's pricing accuracy.  I've read lots of interesting stuff on this site as well as Sellsius and others in regards to Zillow's ultimate plans.  Are they going to become a national MLS?  Should we Realtors be using their tools to enter other homes for sale?  How will the Zillow model impact the real estate industry in general?

I don't know.  I have no idea what Zillow's ultimate plans are.  Don't know if other Realtors should be entering listings of their peers.  I do know that this industry is crying out for change.  I do know that almost every one of my potential clients eventually mentions Zillow.  Most of them enjoy the idea of looking at their home prices and those of their neighbors.  They also seem to understand that Zillow's is not the final word when it comes to pricing.

I've got a friend from Texas who would sum up the consumers this way:  these folks like the dog food and they're hungry for more.

The bottom line is that our customers are visiting Zillow and we need to be able to discuss this topic in a rational, fact-based way. 

 Here are the facts for Boulder real estate sales in the month of March, 2007.  Once again I've compared the Zestimate to the listing agent's pricing.

If you want to see the spreadsheet it's right here. 

The results are:

Zillow's Zestimates are within 5% of the sales price 60% of the time, and within 10% of the sales price 70% of the time.

Agents score within 5% of the sales price 90% of the time, and within 10% of the sales price 90% of the time.

Were they WAY off on any properties?

Yes,  on 560 S. 44th Street, Boulder 80303 Zillow was off by some 16% over the sales price.  I looked at Zillow's details page compared to the MLS data sheet and found a huge item:  Zillow's stats show that the property has 3 acres, while the info in the MLS shows that the property sold with less than 1/4 of an acre (.25).  That's kind of big and seems to fit the themes in my earlier findings.  Namely, that when there is some huge piece of information missing or inaccurate in the public data that Zillow uses, then the Zestimates are way off.

Now, you may be saying, "duhh, Bob".  But we need to keep in mind the fact that Zillow is not pulling these Zestimate out of their #$%'s, they are simply based on formulas.  Garbage in, garbage out.  Good in, good out.  See?

According to Zillow's Data Coverage and Zestimate Accuracy, the accuracy for staying within 10% of the sales price in Boulder is 78%.  They are off here by only 8% even with that glaring overage of 16% on the above property.   

Given their current drive to get home owners to correct misreported facts, it seems that a more accurate Zestimate is just around the corner.  All you have to do is look at the above numbers and assume that someone corrected the acreage discrepancy  from3 acres to .25 acres.  I'm quite certain that would have had an impact.

Comments (2)

Mark Houck
ExecuHome Realty - Abingdon, MD
SFR, REALTOR

Has anyone on here ACTUALLY checked out Zillow's disclosure?

This is a copy and paste verbatim:

What's a ZestimateTM?

The ZestimateTM (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. Variations in price also occur because of negotiating factors, closing costs, and timing of closing. We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

Getting a Comparative Market Analysis (CMA) from a real estate agent

• Getting an appraisal from a professional appraiser

Visiting the house (whenever possible)

• Creating their own estimate using the My Estimator home valuation tool

The way I see it: 2 out of 4 of their recommendations send a potential buyer or seller directly to US - the Realtor!!  I must admit I like Zillow.  Not only have I actually received a lead from Zillow because my photo appeared on a property that someone was looking to get value on, I also have their API tool incorporated into my website which gets quite a bit of hits and attention on my site. 

Instead of trying to fight it, maybe we should try to think outside the box and capture the exposure it provides and use it to our advantage.

Apr 22, 2007 05:19 AM
Denver/Boulder Colorado Real Estate
Real-a-Save - Boulder, CO

Mark, 

I'm certainly not trying to fight it, and I also enjoy their site.  I agree.  I've actually read their disclaimers as well as their accuracy ratings.  Zillow is basically doing exactly what they say they are doing and I don't understand many of the emotional reactions I've read on this and other sites.  This is one of three blogs I've posted with similar analysis, and in each case Zillow was pretty close to their predicted Zestimate Accuracy for my area.

 

 

 

 

Apr 22, 2007 06:17 AM