Zillow's Disastrous Influence (Prescott: appointed, 2013, credit)

[carrollvalley]

I like your reasoning, being a retired RE paralegal, many of the posts are pretty pedestrian. I'm looking to relocate from So Cal to your area. Any suggestions as to a Realtor? Thanx, Wanda

[BriansPerspective]

Originally Posted by carrollvalley

I like your reasoning, being a retired RE paralegal, many of the posts are pretty pedestrian. I'm looking to relocate from So Cal to your area. Any suggestions as to a Realtor? Thanx, Wanda

Ummm... me?

[fluffythewondercat]

We sold a Silicon Valley house last November for $1 million. Today, Zillow’s estimate is $1.2 million, which probably makes the new owners feel pretty good.

I’m guessing that the real purpose of the “zestimates” is to keep people coming back to their site to check their home’s (supposed) value.

[Coop01]

Originally Posted by Djkingman

I do this too. Countless times I find a property I like on Zillow or Realtor.com and look it up on Google Earth and find out that railroad tracks border the property or it's next to a major thorofare or there is a WalMart one block away. You would most likely find out by visiting the property but maybe not. Anyway it is a big time saver.

On something as important as buying a home, I think your advise is prudent. I usually travel to the neighborhood on a weekend evening to check for noisy parties and barking dogs. I'd go during the daylight hours also. If I see someone gardening in their front yard, I'll start up a conversation and I'll ask them outright "If you had to do it again, would you purchase in this area." You'd be surprised the honest answers you get.

[take57]

Originally Posted by 15FaradCap

Another item of contention regarding the Prescŏtt area real estate market, (and many other areas of the U.S. for that matter) is this evident trend toward agents, sellers and buyers with a propensity to completely ignore material and locational facts, then value a property according to Zillow. This somewhat ill conceived tool is having a profound effect on perceived values. It appears to once again be affecting appraisers and other industry professionals, just as it did in the years leading up to the 2008 crash.

Even Zillow's developers will certainly tell you that the system's algorithms can't begin to accurately take into consideration a property's locational surroundings, overall condition, renovations and remodels or lack thereof, aesthetics, desirability or construction materials and quality.

Even though Zillow by design is reactionary, it is in large part affecting a driving factor on market prices. This effect is demonstrably amplified in a market with low inventory and high demand. It's now quite common to see what would otherwise be a home worth half the value of another nearby home that is far superior in condition, location and all other factors, selling at a price far exceeding its actual value, and in many cases as much or nearly as much as the superior home.

A good example of this is phenomenon is homes in the Dewey-Humboldt area. This otherwise somewhat desolate scrubland of inexpensive properties, located within or near the Iron King Mine/Humboldt Smelter Superfund cleanup site is seeing prices on par with the far superior surroundings of the nearby (18 miles) City of Prescŏtt.

While I certainly don’t have a solution for the calamitous effect Zillow is having on Prescŏtt and U.S. real estate markets, my intention is to encourage sellers, real estate professionals and particularly buyers to avoid the complacency and unreasoned influence of Zillow. Buyers…think for yourselves logically and avoid the pitfalls of letting an automated algorithm make one of the most important decisions of your life.

Despite your pearl clutching, it appears based on the responses in this thread very few people take Zillow data all that seriously. If it's a disaster for some folks, it's of their own making. Caveat emptor.

[Hal Roach]

During the class, the expert agents listed homes for triple what they sold for....so I wouldn't trust them either.

[BriansPerspective]

Originally Posted by Hal Roach

During the class, the expert agents listed homes for triple what they sold for....so I wouldn't trust them either.

What class is this? A real estate agent is not going to be very successful pricing homes at triple their value. We are seeing a lot of new and seasoned agents pricing their homes based on comparable list prices rather than comparable sales prices. As a result, there are a ton of overpriced homes on the market. We are now starting to see a lot of price reductions.

We saw a lot of this in 2006. Someone would look at a list price and say, "If THAT home is listed at X, then mine should be listed at X plus $25K. The problem is that X is already $25K overpriced. In a rising market, these mistakes get glossed over, because the market eventually rises to meet the overpriced listing. In level or declining markets, these listings get further and further behind the actual value and linger for months until the agents and sellers wise up to reality.

[swboss]

Originally Posted by swboss

Here's an example of Zillow's problematic, inaccurate data,, and yes, ill-informed users (which seems to be most) think this information is somehow accurate, gospel even. Note in the attached image how Zillow commonly, suddenly changes its Zestimate value in accordance with whatever the property is listed for. Then some poor fool comes along and actually pays at or near list price. Thus the detrimental effect. This example is a home that was listed and removed three times over a over a 10 year period. Still unsold.

The point here is that this sudden change in value is a common occurrence with Zillow. As soon as a property is listed for sale, the Zestimate value changes to coincide with whatever the property is listed for,, only to revert back to average (or some other erratic value) after the listing is removed or taken off market. The example shown in this thread isn't unusual. The Zillow website is fraught with such listing values. Zillow unequivocally effects real estate markets in a negative manner.

[Hal Roach]

Originally Posted by BriansPerspective

What class is this? A real estate agent is not going to be very successful pricing homes at triple their value. We are seeing a lot of new and seasoned agents pricing their homes based on comparable list prices rather than comparable sales prices. As a result, there are a ton of overpriced homes on the market. We are now starting to see a lot of price reductions.

We saw a lot of this in 2006. Someone would look at a list price and say, "If THAT home is listed at X, then mine should be listed at X plus $25K. The problem is that X is already $25K overpriced. In a rising market, these mistakes get glossed over, because the market eventually rises to meet the overpriced listing. In level or declining markets, these listings get further and further behind the actual value and linger for months until the agents and sellers wise up to reality.

Sorry..meant CRASH, 2009...agents were listing homes for triple what they would sell for...it was a rapidly declining market. So it isn't fair to totally dismiss Zillow on the slices of the market it doesn't serve well, just like it is not fair to dismiss all agents due to the half, who just aren't very good. My parents house sold within 2% of Zillow, and the buyer's appraisal was right there, too.

[BriansPerspective]

Originally Posted by Hal Roach

Sorry..meant CRASH, 2009...agents were listing homes for triple what they would sell for...it was a rapidly declining market. So it isn't fair to totally dismiss Zillow on the slices of the market it doesn't serve well, just like it is not fair to dismiss all agents due to the half, who just aren't very good. My parents house sold within 2% of Zillow, and the buyer's appraisal was right there, too.

Agreed. Zillow does a decent job when all of the homes in an area are similar in age and build quality. When there are very few sales, or when the properties vary greatly, Zillow is less accurate - sometimes dramatically. As to why Zillow changes its value when a property is listed, I suspect that their algorithm gives weight to the list price based on the assumption that the list agent has some reasonable basis for the pricing. Obviously some agents are dead wrong and list at unrealistic prices. However, on average, the list prices should be more realistic than not.

For example, we sold the following property at the end of 2017: https://www.zillow.com/homedetails/1.../8764097_zpid/ Prior to listing, Zillow said that the value was $300K. We listed the home at $370K. Zillow then increased its estimate to $368K and it sold for $360K. We tend to price our listings very close to market value, so this was a case where Zillow was simply incorrect in its estimating. The homes in this subdivision are dramatically different from each other. Some are beautifully upgraded and others are gut jobs.

We are listing another home in the near future where the Zillow value is currently above our list price. It will be interesting to see if Zillow reduces its estimated value after we list the property.