How Accurate are "Zestimates"?
The talk just keeps heating up out there as more and more Realtors challenge Zillow's idea of house value online in LinkedIn, Facebook and Google + discussions. Especially with Move, Inc and The National Association of Realtors winning an early victory in the court battle against Zillow and Errol Samuelson, the former president of Realtor.com.
I'm going to show you some local examples, as well as show you some examples in other states how inaccurate third party or "E-commerce" sites like Zillow are, but also where you can turn for accurate, quantifiable information about homes in your area.
For instance, take a home listed at $200,000 at 1619 Beechshire Dr, Anderson Twp, OH 45255, which sold for $190,000 on 07/14/2014 just a few days ago. I looked it up on Zillow and their current "Zestimate" of this two story, spacious home is a whopping $276,629.
Bad for Buyers, Sellers and Realtors
That's a humongous $76,629 dollar difference over the asking price of $200,000, and $86,000 over the final sales price, a 31% difference. What really bakes my noodle are buyers continuing to swallow that just because they saw it on online, on a well-known website.
Too, as a Realtor, imagine trying to explain to a seller what their home is worth after having seen the "Zesitimate", giving professional recommendations with a low, median and highest sales price range they can expect with a proper comparative market analysis like Realtors do based on seller's time frame to sell. "But Zillow says ... " Undervalued or overvalued; nobody wins. Well, except Zillow.
Now, I'm sure that buyers would love a lot of the homes that are over-priced on Zillow, (or under-valued) but will never see them because it's outside their price range when they're searching. They could have found a better home and deal.
What many consumers in the housing market don't understand, E-commerce sites like this rely on MLS feeds from brokerages to have some accurate information. However, the rest is a mathematical slot machine of algorithms with no basis on factual sales data, hence the inaccuracies. This is what has the National Association of Realtors, Move, Inc., and innumerable of Realtors so upset. If that's innacurate, how about getting pre-approved through Zillow? I'm sure there's some sort of ad-deal going on between them and certain lenders, but does it mean excellent choices of financing?
Let me share with you a Realtor's perspective that first time buyers will find useful. Zillow takes these MLS feeds, development paid for by your local real estate brokerages, to feed their site content, then turn around and charge agents advertising space per zip code at a premium. Do you know what the difference is between a "Premiere" Zillow agent and just an agent on Zillow? The premiere agent just paid for a bigger ad package. It's not based on knowledge or skill, just what the agent can afford.
You're better off to visit a local real estate site of a reputable brokerage and shop for an agent or inquire of properties on that site to ensure you get a professional behind a brand you recognize and trust, get the most listings and accurate, current data.
Where's the benefit for the buyer? There's no screening process to be a featured agent on Zillow, except for a valid credit card. Seller's might ignorantly get upset they don't see their home on Zillow, but here's a shocker: My business partner and I have had clients raise the roof with us because Zillow's estimate of their house value was way under or way over their target fair market value, and this cheats them out of potential qualified buyers. Unfortunately we have no control over that except to voice these very serious concerns.
It would seem though, one battle at time, we're winning. Regardless, there are many marketing venues online, I'm not going to cry over Zillow. Our own site and social media channels for instance generates hundreds of buyers every month in our various territories and we get it sold. No need for Zillow.
Here's another shocker for some, I can honestly say in the last three years I've had over a hundred calls from Zillow asking about a house only to have to tell an anxious buyer after researching it, the home wasn't actually for sale. Besides, I'd love to see Zillow take into account unfolding impacting events; refurbishing, employers moving in out of an area, new construction nearby of either more homes or freeways, layoffs, or myriads of other events affecting each local housing market in the U.S. If they can do that, I'll quit chanting, and fire my psychic immediately.
Only a competent Realtor can give you fact-based advice and data when it comes to buying or selling (Sorry FSBO's).
A CMA (comparative market analysis) or math based on actual MLS data is the only way to get highly accurate results for house values. In fact, I'm waiting on programming for our site that will estimate house value, but purely factored from local, live MLS data and should be within one to two percent of fair market value, but CMA's should still be conducted by a Realtor in an effort to save buyers on a purchase or net more for sellers.
I'm hoping to publish that feature on our site later this year and looking forward to discussing this with our managing partner. In fact, as webmaster I flat out advised our site should not and doesn't now have a feed to Zillow, which I'm quite proud of. Brokerages little by little that are internet savvy aren't developing feeds for E-commerce sites any more, paving the way to beat their search engine rankings in their own respective backyards.
If you're a Realtor, feel free to share this with the media bar above, and no, I'm not out to steal your business. I respect the fact that someone is currently working with another agent.
How Accurate are Zestimates? More examples from other states:
Ohio isn't the only state seeing huge inaccuracies. For instance, Bill Gassett, another fellow Realtor with RE/MAX Executive Realty I know from Google + published an article about it a while back and many Realtors responded back with articles of their own. In Rochester, New York a study was done on a neighborhood and less than half of Zillow's estimates where anywhere close on thirty eight homes. A similar study was done in Las Vegas on a focused neighborhood and out of 18 homes, only 8 sold for in the ball park of the "Zestimate". I have seen this play out over and over online all across the country and, sadly, it's commonplace.
Read more news about Di-Zastrous Zestimates You'll see, as Bill Gassett gathered together, it's happening all over.
Again, use local real estate sites, there are many reputable brokerages like ours who are purely MLS powered with high accuracy and timely updating. Ours updates every few hours.
If you're looking for a home in Ohio, or Northern Kentucky and would to only see actual homes for sale at for the most part at fair market value here you go: