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The problem is that BUYERS DO pay attention to the Zestimates and many of them have no clue how to evaluate the accuracy, even when there is other information out there. Just the other week my husband was talking to someone who was about to start the home buying process, who was criticizing asking prices and saying how wonderful it is that they can come home and look at the Zillow Zestimate and find out that the seller is overpricing their house by $X.
I put the "true believers" in two main categories. First there are the people who have never paid attention to real estate until suddenly they're in the market... or almost in the market... to buy their first home. They've never used Zillow til now or followed any of the controversy surrounding it. They have no clue about what goes into the Zestimate and how the accuracy might vary dramatically in different markets. They have no clue how to find recent sales info. which is often available on a public side of the local MLS. They have no clue how to find tax assessments, equalization ratios... anything which would allow them, without the help of a realtor, to do some research themselves. The internet says it's so, so it must be so. The second category seems to be those people who are working with a realtor and are perhaps a bit more savvier after looking at a few houses, but they still want to believe Zillow if Zillow gives a low-ball Zestimate for a house they want to buy or are in negotiations for.
Real Estate professionals and those actively in the market for awhile may have gotten the message that the Zillow Zestimate is useless. I think a lot of people would be surprised at how many people assume it is valid.
For my part, I have always been baffled at how the Zestimate can have zero connection to any hard data - Zillow moderators claim that when there are few sales or comparable sales in the area (as in rural areas with varied housing) that the tax assessment plays a major role. Not so, it seems, even for relative values of properties in a given area. And if a house just sold in an arm's length transaction in the open and competitive market, shouldn't the sale price be the Zestimate? Or at least the Zestimate should be close? But it typically isn't, even when the sale price is shown prominently on the Zillow profile.
Ugh, just read through the rest of the comments on this thread. I hate it when people say that they look at Zillow "just to get a general idea" of the value of a property.... it's no different from when Zillow defends the Zestimate as "just an informed starting point." The problem is, it doesn't give you a general idea unless perhaps you are focusing solely on the tax assessment info. (which isn't always right and is often a couple years out of date, but is usually more accurate than the Zestimate) or you are hoping to find the value of the house within $100,000 or so and don't happen upon any of the truly egregious errors. In addition to absolute value being screwy, relative values are way off too even when tax assessments and recent sale prices for specific properties are known.
This is probably the best comment I have read on this Forum about the deficiencies of Zestimates. I only hope that Cowbell76 continues to post such informed perspective on this board to highligh the issues and failings of Zillows Zestimates.
In our neighborhood of pre-WWII houses, you will see complete renovations costing hundreds of thousands of dollars, as well as houses that have been neglected or rented out for many years, without even basic maintenance. In recent months, few homes the size of ours (small) have come on the market, but almost all fall into the second category. Guess how that's affected the Zillow estimate for all other houses?
But once those homes sell, those are still going to be the first reference point potential buyers have even if looking at homes in the first category. That's not really a zillow thing.
Not necessarily. If the other party is willing to give it credence, it can be a negotiating tool. Doesn't matter if it's accurate, only if it can be used to your benefit.
If ever I list my house I'll put this at the end of the notes section about the house, "Zillow home information has been determined to be inaccurate and not to be used as an indicator for home value. Please use current comps and your realtor's advice should you decide to make an offer on this home."
They have all my home's info wrong. I even signed up to correct the information and it's STILL wrong. The streetview picture is very outdated - our landscaping is completely different now. The overhead picture doesn't show the addition we put on two years ago. Some the data listed for the home is wrong (stuff I can't edit).
Homes in my neighborhood sell for $100-105 per sq ft - no matter their size. The general rule in our neighborhood has been if your home has 2400 sq ft, you list for $240-255K. If it's 3000 sq ft, you list for $300-315K. Even during the housing bust they were still selling for $95-100/sq ft because I live in a neighborhood people want to live in.
And yet they have my zestimate listed at $86/sq ft. *insert eye roll here* .
I love my Zillow estimate! No house in my community has sold for over $325k in many years--since the housing crash. BUT Zillow says my house is worth $565k. I'd sell it to them today if they would buy it for that price! And I have no idea why mine is sooo high, my neighbor's estimates are in a normal range.
streetview picture is very outdated - our landscaping is completely different now. The overhead picture doesn't show the addition we put on two years ago.
Zillow is pretty accurate for my home actually. Its got a reasonable algorithm to determine pricing, and if the home has flipped a few times, and the area is in the suburbs it seems accurate. Shrug. The real estate agents hate it with a passion obviously because when its inaccurate it makes their lives hell, and if its accurate it threatens their income. Either way some serious hate going on.
But in suburbs, with good information on the house it seems to do a decent job.
I think they use Bing actually (and it says it on the bottom left corner of the map)
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