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Zillow Accuracy Revealed
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A recent Wall Street Journal article took a look at the accuracy of Zillow home real estate value estimates and they found that Zillow was either accurate to within 7.8% with reality. The WSJ took 1,000 recent sales and compared the sale price with Zillow’s estimate (which didn’t reflect the sale) and found that it was within 7.8% accurate, evenly split on the high and low side. However, the average doesn’t tell the full story, what’s the standard deviation? Well, on 110 of the 1000, it was off by more than 25% and of the 110, 23 were off by more than 50%. Zillow’s nice and, as I’ve mentioned in the past, it’s only as good as the information it has – often times it doesn’t have the full picture.
The example in the article was 7600 sq. ft. four bedroom home that Zillow estimated to be worth $661,756 but was recently sold for $2.7M. Why the huge disparity? It’s in an exclusive gated community, something Zillow wasn’t aware of.
So, what’s the verdict on Zillow? Still a fun little tool that really doesn’t bring much to the table. Can you use it to get an idea of the value of a home? Sure, but I wouldn’t bet any money on it.
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Last time I looked at it for my neighborhood in west L.A., it was WAY off. Here you can go across the street and home prices jump hundreds of thousands of dollars.
For my home, it seems to lowball because it is unaware of a finished basement and other enhancements to the landscaping and backyard. The basement adds 740 sq ft (1 bedroom, 1 bath, and a family room) – which a revised Zillow estimate says tacks on something like $50,000 to the price of the home (metro Denver).
I doubt the home is worth what Zillow says, if only because they don’t know I have two big dogs, two cats, and two kids, all of whom have done their part to damage things. I’ll spend $5-10K just getting the home ready to sell when the time comes!
i remember when zillow first came out, a bunch of realtors i know loved how inaccurate zillow was because it freaked out their potential sellers who now believed that their homes were worth so much they thought therefore created a sense of urgency to hire realtors to sell their listings. hmmm. i heard one of the reasons that zillow was (and i am not sure if this is still the case) inaccurate because zillow took data from public records which are generally not accurate since home owners generally don’t volunteer information such as new added bedrooms… obviously the error of margin is much better. but it’s true. i would take this type of info with a grain of salt. but they must be doing something right since somehow they manage to become a household name.
cheers,
cindy
Hi, this is David from Zillow.
Cindy — you’re right — we do rely heavily on public records to calculate Zestimates and those records can be incorrect or (more often) incomplete. So, we now allow owners to claim their house and post updated facts. Users can also use that new information to re-calculate Zestimates.
realestateabc.com would be their competitors.
Also take a look at my-currency.com, they are taking bottom up approach at evaluations.
I just looked at realestateabc.com and guess what they use as the estimated value for the home–you guessed it Zillow’s Zestimate! So somebody seems to like it. At any rate, you have to look at the Zestimate range they give not just the single value posted. These vary quite a bit do to uncertainty based on local factors. Also as mentioned above this value can greatly underestimate a house’s value if a lot of renovations have been made and not entered into public records. In the final analysis the Zestimate is jsut a tool, and like any tool its value is dependent on the user!
Zillow has had the value of my home dropping like a rock since we purchased it a year ago. It is new construction and we bought it a the beginning of the bottom of the market. since we bought our home, we have since finished our basement adding 1,580 sq ft with bedroom, six closets and a full bath. We have added upgrades to the house as well, and six other homes in our new subdivision have sold for 20,000 to 90,000 dollars more than we bought ours. we are in the bethlehem, pa area. don’t trust this site, it is about as accurate as wikipedia!
Zillow is completely inaccurate in it’s values simply for the fact that it doesn’t take into account the home itself. It makes an estimate based on all facts and figures provided to it which yes, land value and comparable sales do count for something but in a neighborhood it recently showed one home valued $115,000 higher than one for sale 4 homes down the street. The home valued higher was a foreclosure property and had been TORN APART by the vacating former owners. The home down the street was smaller and was only a 3 bed 1.5 bath whereas the foreclosure property had a larger lot, and was a 4 bed 2.5 bath…that would probably need $100k worth of work to repair it. ALWAYS consult a realtor, always examine the property and do not trust Zillow’s estimates. This is just one of hundreds of examples. Also make sure you get a very, very thorough home inspection especially in New England where sewer drainage pipes can be broken under ground, a very expensive repair.
With all the negative publicity in the real estate market, Zillow doesn’t help matters. For example I have a house for sale with the mnarket value of $330,000 whereas ZXillow has it deown for $269,000. My son has a house mkt value approx $550-600,00 – Zillow has it for $431,00 without the correct number ob bedrooms and bathrooms – go figure. The public
is looking at Zillow Farce and playing havoc with real estate.
Zillow is an awesome tool for those who understand how to use it. It takes the facts beds, baths sqft etc. and uses good statistics (multiple regression analysis) to assign values to all these variables and spits out a non-biased estimate. The estimate does not take quality into consideration, if your house is above average for you area the z-estimate will be low if it is below average it will be high. With this understanding of how it works I put much more faith in zillow then appraisers who’s process has no scientific basis, uses hand selected comparables and can use come up with any number they want to. Some houses will have issues because of neighborhood values but overall its a quick and easy way to find a deal.
Zillow is a fabulous tool when used with the full knowledge of its limitations. It does not have all the facts that will affect a true value.
For the record, when I bought me house, the banks appraisal was almost an exact match to Zillow.
I’m suspicious that in the last month my house has gone up 65k, while the rest of the market crapped? I’m wondering if the banks, or some other business, is attempting to “rig” the system? Maybe in Zillows back pocket…something. The timing just seems very interesting to me.
I bought a townhouse last month and Zillow’s estimate was only $2000 from the official appraisal… not bad if you ask me!
I’ve found that Zillow is fairly accurate in the subdivision I live in because all of the homes here are so similar to one another and were all built around the same year. However when I look up the Zillow value of my parents’ house, the number seems to completely off. I think house value estimates there are difficult because neighboring houses vary in size, age, and upgrades to a huge degree.
I can tell you, at least for my home, it is laughable. I have about 2000 SF, finished media room, custom fireplace, 90 ft winding brick paver walkway, professional landscape, new windows, new siding, hardwood floors, granite countertops in kitchen, granite floors in bathrooms, SS appliances, and other (what I think is stupid, but listings always state, are crown mouldings, recessed lighting etc… and the listing??? $209K… oh, a built in pool (ok, it’s small, round but has full brick pavers and fence all around). Also, backs up to forest. The funny part is, I have been in neighbors homes, some Zillow rates at 300K or so, and, well, have a look for yourself… you’ll be able to spot mine based on the description. Look up Laurel Ct in zip code 60118