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the people that post here may dismiss the Zestimate and Zillow at large as info-tainment. However, it is a real issue for the real estate industry, and not because weak-minded folks do indeed rely it for their actual data(some who post frequently on this forum) , but as much because an entire generation of folks generally follows the "if it's on the internet,it must be real".
There are sellers of over-zestimated homes who believe it really is the value, and harm the process and themselves. And there are buyers who see a Zestimate below the asking price and refuse to offer/negotiate above that $ figure.
Perhaps Zillow uses specific properties, and just doesn't reveal them. Redfin at least gets it better because (while their values differ significantly and often from Zillow) they show you what homes they've claimed are comparables. At least an intelligent and experienced Buyer can look at those and say "this house is, this house isn't, comparable". Redfin still uses a formula, or they wouldn't comp 30+ year old homes to new construction.
Good post BoBromhal. I only skimmed this thread but here's an interesting observation about Zillow I made years ago, and it made me never trust the "Zestimates" in the same way again.
I don't have screen shots but I can tell you for a fact they manipulated the figures after the 2007 real estate crash. I was tracking, informally, at least 3 properties at the time. The one I sold in 2005, the one I bought in very early 2006 and the house of some family friends who were idiots and chased the down market from 2007 to 2009 when they finally sold for much less than they'd hoped.
At one point the Zestimate was showing that my house was worth well over 450K. That would have been in mid 2006 I guess, right before the "pop". However if you look at the chart now (well, the past few years - it cuts off at 10 years) it says it was never worth over about 390K. They adjusted their pre-bubble figures to make it look as though they had never been hyping the bubble themselves, which of course is untrue. I saw something similar with the other properties I was tracking. In my case, you could say "well, you bought it for 390K, so their algorithm is 'correct' to think that." Even though it was claiming it was worth more when I bought it, and kept pumping up the value until maybe Sept or Oct. 2006. But the real proof in the pudding was the poor fools I knew trying to sell their house throughout the bubble. It was a rather plain house in Great Falls, VA, but had a good lot, almost 2 acres, and had been near 1 million at the peak of the bubble. (Zestimate I mean!) A similar house sold for about 1 million in 2006. As the market crashed, Zillow actually reduced _what they had been claiming it was worth in mid 2006_! Well before they sold it! They were crestfallen because they got a figure stuck in their head from Zillow and their first Realtor (TM), of 1 million, but ended up selling for around 700k in 2009. If the fools had just taken the 850K offers they probably were getting in early 2007, they would have been much better off. "We can't give it away" is what they were telling everyone.
And critically, of course, they don't make a specific claim about what the chart represents. They don't say it ISN'T a retroactive calculation; but obviously there was a 1 million comparable for the Great Falls house. The "Zestimate" really was that in mid 2006, and that's probably what it was really worth if my family friends had moved a little faster and gotten a better first agent. So it seemed to me as I tracked the family's efforts to sell it from 2007 to 2009, that as the 2006 figure ticked down...Zillow was trying to hide something. Either hide the bubble itself or hide their complicity in fueling it. In other words if the market was going up, they were pumping up the zestimates; if the market was crashing they were trying to conceal the fact it was crashing. That's part of the definition of clickbait: telling or showing people what they want to see, rather than reality. I remember myself being "chuffed" as the Brits would say, that the house I was buying had a higher zestimate than what I was paying. And it kept going higher for a while.
Last edited by ZigZagBoom; 09-21-2016 at 12:43 AM..
the people that post here may dismiss the Zestimate and Zillow at large as info-tainment. However, it is a real issue for the real estate industry, and not because weak-minded folks do indeed rely it for their actual data(some who post frequently on this forum) , but as much because an entire generation of folks generally follows the "if it's on the internet,it must be real".
There are sellers of over-zestimated homes who believe it really is the value, and harm the process and themselves. And there are buyers who see a Zestimate below the asking price and refuse to offer/negotiate above that $ figure.
Perhaps Zillow uses specific properties, and just doesn't reveal them. Redfin at least gets it better because (while their values differ significantly and often from Zillow) they show you what homes they've claimed are comparables. At least an intelligent and experienced Buyer can look at those and say "this house is, this house isn't, comparable". Redfin still uses a formula, or they wouldn't comp 30+ year old homes to new construction.
Z is not a brokerage. Redfin is.
One major difference:
Redfin operates under the NAR COE, and Z has no ethical industry boundaries, and eagerly tries to capitalize on that fact.
I wonder if a brokerage firm's AVM can/should be reasonably held to ethical requirements? It seems that it could be, IMO, as it is clear that much of the public fails to differentiate between an AVM and a CMA or an appraisal, and poor AVM's are often as detrimental as a bad CMA or as using tax rolls for valuation.
There are sellers of over-zestimated homes who believe it really is the value, and harm the process and themselves. And there are buyers who see a Zestimate below the asking price and refuse to offer/negotiate above that $ figure.
But again I would think a good agent should be able to explain the flaws of the zestimate pretty easily. And pretty sure neither of those things happened to Surbiton anyway. It'd be one thing if he/she was simply trying to raise awareness of the inaccuracy of the zestimate in general, but IMO Surbiton's biggest complaint was about zillow's refusal to change the zestimate on his/her own home.
Which is why most people laugh at the number of posts Surbiton makes about zestimates. It's an algorithm that spits out a number for free and obviously there are no zestimators that actually see the homes in person so a reasonable person has no need to put that much stock into it. If ZigZagBooms theory is accurate, that'd be a bigger complaint IMO.
But again I would think a good agent should be able to explain the flaws of the zestimate pretty easily. And pretty sure neither of those things happened to Surbiton anyway. It'd be one thing if he/she was simply trying to raise awareness of the inaccuracy of the zestimate in general, but IMO Surbiton's biggest complaint was about zillow's refusal to change the zestimate on his/her own home.
Which is why most people laugh at the number of posts Surbiton makes about zestimates. It's an algorithm that spits out a number for free and obviously there are no zestimators that actually see the homes in person so a reasonable person has no need to put that much stock into it. If ZigZagBooms theory is accurate, that'd be a bigger complaint IMO.
I believe that Bo is a good agent. I would like to think that I am also.
Explanations only go so far if the agent is in the introductory phase of building trust with a prospective client.
When the consumer still views the relationship as salesperson-to-consumer, with many shields up, explanations are less effective than when their is an agent/client relationship, with some trust already established.
When trust is not established, telling a prospective seller that $450,000 Zestimate for their $350,000 house is wrong can be a good way to fail in the interview.
Along those lines...
Having worked with people on money numbers for years prior to a real estate license, I can tell you, human mindset is a funny thing. Once a number is out there, it cannot be pulled back from conscious or subconscious residence.
"Just give me a ballpark. I know; I won't hold you to it." And then, many very normal and nice people just cannot release that ballpark number from memory.
If the number is too high, in an attempt to avoid immediate displeasure, the sales guy may not be able to deliver, and the client is displeased.
If the ballpark number is too low, and the actual number will be higher, the consumer is often initially taken aback and displeased, and the sales guy doesn't get another shot at fine-tuning.
So agents "buy" listings with pie-in-the-sky pricing, with a long contract, and with the intent to immediately initiate strategies to beat the seller into line with reality. Because, they need to come up with a great number to get a listing. And, they have gurus telling them to take an overpriced listing, because someone else will anyway, and they can expect to pick up two buyers from a listing.
I believe that Bo is a good agent. I would like to think that I am also.
Explanations only go so far if the agent is in the introductory phase of building trust with a prospective client.
When the consumer still views the relationship as salesperson-to-consumer, with many shields up, explanations are less effective than when their is an agent/client relationship, with some trust already established.
When trust is not established, telling a prospective seller that $450,000 Zestimate for their $350,000 house is wrong can be a good way to fail in the interview.
Along those lines...
Having worked with people on money numbers for years prior to a real estate license, I can tell you, human mindset is a funny thing. Once a number is out there, it cannot be pulled back from conscious or subconscious residence.
"Just give me a ballpark. I know; I won't hold you to it." And then, many very normal and nice people just cannot release that ballpark number from memory.
If the number is too high, in an attempt to avoid immediate displeasure, the sales guy may not be able to deliver, and the client is displeased.
If the ballpark number is too low, and the actual number will be higher, the consumer is often initially taken aback and displeased, and the sales guy doesn't get another shot at fine-tuning.
So agents "buy" listings with pie-in-the-sky pricing, with a long contract, and with the intent to immediately initiate strategies to beat the seller into line with reality. Because, they need to come up with a great number to get a listing. And, they have gurus telling them to take an overpriced listing, because someone else will anyway, and they can expect to pick up two buyers from a listing.
I get the second part, but I still don't think it should be too difficult to disprove an erroneous zestimate without sacrificing trust. Most of the time a zestimate that's way off is one of two things - in an area where not all the data is public, or there is a wide variety of homes that aren't comparable. Probably even more reason to do your own market analysis beforehand if you weren't already and bring up specific properties that if they're considering selling they may already be familiar with.
I get the second part, but I still don't think it should be too difficult to disprove an erroneous zestimate without sacrificing trust. Most of the time a zestimate that's way off is one of two things - in an area where not all the data is public, or there is a wide variety of homes that aren't comparable. Probably even more reason to do your own market analysis beforehand if you weren't already and bring up specific properties that if they're considering selling they may already be familiar with.
Sure. Sometimes.
But I will never forget the time I stood in front of one of my listings, talking to a family I just met.
"I won't pay over what Zillow says it is worth," and Z was way low, based on wrong square footage in the tax rolls.
And, my explanation fell on deaf ears. Z has a snazzy website....
In a diverse area, with clients from other countries, and many people transitioning in and out with job transfers from other states, that is just not as unusual as it might be.
so after 5 years of highlighting the fundamental flaws of zillow zestimates i thought it would be useful to have a consolidated thread of the questions asked and what i have learned. There are many other questions about zillow and zestimates that other contributors have posted and the common theme is how inaccurate zestimates are whilst accepting some of the other information published by zillow is useful to homeowners and prospective homeowners.
It begs the question "why does zillow alienate so many homeowners by refusing to correct or delete inaccurate zestimates?". It also seems from the home sale and the home purchase earlier this year by zillow ceo spencer rascoff raises questions as to whether zestimates are subject to manipulation. The home he sold in seattle for $1.05m in february had a zestimate of $1.34m when the home was listed in july 2015 for $1.295m. As the list price kept reducing down to the agreed sale price of $1.05m, the zestimate kept increasing to $1.75m. In the same timeframe the home rascoff purchased in los angeles for $19.7m had a zestimate of $13.2m when listed in early march for $20m, and subsequently the zestimate has increased by 47% in six months to $19.4m. Coincidence? Or the work of underling at zillow sucking up to please the boss? Read the explanation by zestimate architect stan humphries zestimiss: Why did ceo spencer rascoff's home sell for 40% less than zillow estimate of $1.75m? - geekwire
when spencer rascoff accepted on bloomberg tv a couple of years ago the findings by clareity consulting that 17% of all zestimates are more than 24% inaccurate you would think he would consider it reasonable that homeowners who demonstrate inaccurate zestimates should be allowed to 'opt out' of having an inaccurate zestimate dictatorially imposed if they had issues about the damage and misery the inaccurate zestimate caused. It is time our government intervened and imposed some form of regulation to protect millions of homeowners from zillows flawed zestimates as zillow has demonstrated that they cannot be trusted to act in a fair minded way as they use zestimates as 'clickbait' to attract users to its website without any concern for the homeowners affected.
When i first posted about zestimates 5 years ago i would have been satisfied if it helped explain issues about zestimate accuracy to a handful of people. It's hard to believe over 300,000 have read my thoughts about zestimates since i started. Equally, i am sure spencer rascoff, the zillow ceo, didn't believe me when i said i would protest the nonsense zestimate imposed on my home for 20 years if that is as long as it takes, in response to his email comment that he has a first amendment right to publish any valuation on homes. Zillow rely on people making one or two protests and giving up. If more people persisted in highlighting zillows anti homeowner behavior then the issue would get resolved.
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