I had a conversation recently with a home owner about the online valuation site Zillow, and it went like this:
Owner: Your value was right on.
Me: Wonderful. That’s great to hear.
Owner: It was right in line with Zillow.
Me: Oh, okay.
This conversation made me smile since like many consumers, the property owner thinks of Zillow as the standard for accuracy. After all, Zillow is a very well-known brand that is becoming a household name. Heck, even President Obama used Zillow to moderate a conversation on housing a few months ago. We still need to ask the question though, how reliable is Zillow? Let’s take a look at 10 recent actual appraisals compared with “Zestimates”. I would be curious to hear your take too – especially if you’ve had a recent appraisal. How much of a value difference was there between the “human” (appraiser) and “machine” (Zillow)?
- Tahoe Park Area House: Appraisal: $133,000; Zillow: $114,173 (-14%)
- Del Paso Manor House: Appraisal: $332,000; Zillow: $305,000 (-8.1%)
- Midtown Fixer: Appraisal: $130,000; Zillow: $203,000 (+56%)
- Citrus Heights House: Appraisal: $278,000; Zillow: $240,000 (-13.7 %)
- Citrus Heights House: Appraisal: $138,000; Zillow: $194,000 (+40.6%)
- College Greens House: Appraisal: $259,000; Zillow: $282,000 (+8.9%)
- Fair Oaks House: Appraisal: $630,000; Zillow: $612,000 (-2.8%)
- Galt House: Appraisal: $191,000; Zillow: $188,000 (+1.5%)
- Mather House: Appraisal: $255,000; Zillow: $238,000 (-6.7%)
- Capital Village House: Appraisal: $233,000; Zillow: $191,000 (-18%)
Appraisals vs. Zestimates: First off, I am not anti-Zillow since I believe there is a place for Zillow in today’s world. I’m actually a fan of their graphs, rental estimates, neighborhood information and the power of their brand. Ultimately I tend to give little weight to “Zestimates” for the following four reasons:
- Condition: Zillow has no idea about condition or upgrades. This often makes an enormous difference in value (obviously).
- Knowing the Niche: It is very challenging for Zillow to capture the idiosyncracies of niche areas that fetch higher or lower prices for whatever reason.
- Margin of Error: Zillow posts their margin of error, and it shows they are off by quite a bit (click the link). Of course to be fair, appraisers can be off too.
- Distressed Sales: I’ve noticed at times Zillow struggles to see beyond distressed sales. For instance, the vast majority of sales in Capital Village (#10) have been short sales recently that sold for too little, and Zillow …read more