How Bad Are Zillow “Zestimates”? • Hacker News Board

Re: How Bad Are Zillow “Zestimates”?

#11

Post by ensignavenger » Mon, Dec 05, 2016, 3:42 PM UTC

donmaq wrote: post #3

SF Bay area, I've had 3 formal house assessments, & each time they "start with" Zillow et al to look at "reasonable values in the neighborhood". Which seriously affects your ability to refi, etc. So Yeah Zillow has an effect. It's worth it to create a login & enter in your upgrades, so your ZESTIMATE goes up.

Who is doing these "formal assessments"? Are these broker price opinions (performed by a real estate broker)? It seems very odd they would use Zillow data instead of the MLS to find comps.

Re: How Bad Are Zillow “Zestimates”?

#12

Post by drewbuschhorn » Mon, Dec 05, 2016, 3:42 PM UTC

I bought a home last year, and each realtor I talked to brought up how terrible Zillow was before I ever mentioned it. If you look at the WaPo article all the comments are by other realtors, so I'd take those comments with a grain of salt. Oddly, my mortgage guy never looked at Zillow (that I saw) for figuring out values, so shrug.

I'm sure the data is inaccurate, but it's somewhere to start the conversation and let people feel like they have some power in the process of buying and selling homes.

And as people like to say about Uber, realtors are welcome to make a competing site that's as free and easy to use.

Re: How Bad Are Zillow “Zestimates”?

#13

Post by intrasight » Mon, Dec 05, 2016, 3:43 PM UTC

Better question is "how bad are the compared to those of professional appraisers who look at half a dozen comprables?" An even more important question is "how biased (based on who is paying) are those professional appraisers?"

Re: How Bad Are Zillow “Zestimates”?

#14

Post by cbr » Mon, Dec 05, 2016, 3:46 PM UTC

organsnyder wrote: post #6

In my experience, Zillow does a terrible job compared to local knowledge. My zip code is weird—our ~$275k house backs up to houses worth $50-70k (the disparity is due to build quality, lot size, and the streets they're on). Not surprisingly, Zillow handles this very poorly, and has consistently valued our house at much lower than it is actually worth (based on city assessments and sales of nearby comps). Interestingl…

> What's puzzling is that they also bumped up the historical Zestimates

There are two things a "historical estimate" could mean:

1) What did Zillow say the value was on day X?

2) What does Zillow now think the value was on day X?

You and others seem to be thinking of (1), but I think Zillow actually is doing (2). Since the goal is to figure out what the house is worth and how its value has changed, I think (2) is actually the right metric here.

Re: How Bad Are Zillow “Zestimates”?

#15

Post by toomuchtodo » Mon, Dec 05, 2016, 3:49 PM UTC

drewbuschhorn wrote: post #12

I bought a home last year, and each realtor I talked to brought up how terrible Zillow was before I ever mentioned it. If you look at the WaPo article all the comments are by other realtors, so I'd take those comments with a grain of salt. Oddly, my mortgage guy never looked at Zillow (that I saw) for figuring out values, so shrug . I'm sure the data is inaccurate, but it's somewhere to start the conversation and let…

No one takes a Zestimate seriously in real estate (not realtors, not banks), so there's no need to create a free competitor.

Financing still lives and dies by the professional appriasal; as long as banks prefer that, Zillow has zero pull.

Re: How Bad Are Zillow “Zestimates”?

#16

Post by tyingq » Mon, Dec 05, 2016, 3:51 PM UTC

cbr wrote: post #14

organsnyder wrote: post #6

In my experience, Zillow does a terrible job compared to local knowledge. My zip code is weird—our ~$275k house backs up to houses worth $50-70k (the disparity is due to build quality, lot size, and the streets they're on). Not surprisingly, Zillow handles this very poorly, and has consistently valued our house at much lower than it is actually worth (based on city assessments and sales of nearby comps). Interestingl…

> What's puzzling is that they also bumped up the historical Zestimates There are two things a "historical estimate" could mean: 1) What did Zillow say the value was on day X? 2) What does Zillow now think the value was on day X? You and others seem to be thinking of (1), but I think Zillow actually is doing (2). Since the goal is to figure out what the house is worth and how its value has changed, I think (2) is act…

(2), of course, has the advantage of obscuring past mistakes and producing a nice smooth chart.

Re: How Bad Are Zillow “Zestimates”?

#17

Post by sidlls » Mon, Dec 05, 2016, 3:52 PM UTC

intrasight wrote: post #13

Better question is "how bad are the compared to those of professional appraisers who look at half a dozen comprables?" An even more important question is "how biased (based on who is paying) are those professional appraisers?"

Home appraisal in the real estate market is often not very rigorous. There's a basic set of rules the vast majority of professional appraisers use to derive a market estimate. It's weighted heavily toward "comparable" (homes with similar size, room configuration, etc.) nearby recent sales with adjustments for certain renovations, condition (e.g. deterioration; estimates start from an assumption of "good, working condition"), and possibly other factors.

Actually computing the market value as a "cost-to-build-today" is rarely done, at least for home sales the typical consumer is going to be involved in.

And those appraisers can be very biased in either direction.

Re: How Bad Are Zillow “Zestimates”?

#18

Post by ensignavenger » Mon, Dec 05, 2016, 3:53 PM UTC

EpicEng wrote: post #2

More comprehensive studies have ben performed: https://www.washingtonpost.com/news/where-we-live/wp/2014/06... I just bought a home myself and looked this up, but the takeaway is that the Zestimate is within +- 5% 50% of the time. So, not that accurate. Are people really using it in negotiations though? I'm sure people do, but you'd have to be pretty uninformed to do so, and I'm also sure you're real estate agent wou…

Yeah, but how accurate are appraisals? Several years ago I was reading about an analysis that found that Zestimates were about as accurate as appraisals are 80%+ of the time.

Re: How Bad Are Zillow “Zestimates”?

#19

Post by drewbuschhorn » Mon, Dec 05, 2016, 3:55 PM UTC

toomuchtodo wrote: post #15

drewbuschhorn wrote: post #12

I bought a home last year, and each realtor I talked to brought up how terrible Zillow was before I ever mentioned it. If you look at the WaPo article all the comments are by other realtors, so I'd take those comments with a grain of salt. Oddly, my mortgage guy never looked at Zillow (that I saw) for figuring out values, so shrug . I'm sure the data is inaccurate, but it's somewhere to start the conversation and let…

No one takes a Zestimate seriously in real estate (not realtors, not banks), so there's no need to create a free competitor. Financing still lives and dies by the professional appriasal; as long as banks prefer that, Zillow has zero pull.

Unfortunately I wasn't able to afford to have a professional appraisal done for every house my realtor showed me. I'm glad you were in a different position.

Re: How Bad Are Zillow “Zestimates”?

#20

Post by coredog64 » Mon, Dec 05, 2016, 3:55 PM UTC

drewbuschhorn wrote: post #12

I bought a home last year, and each realtor I talked to brought up how terrible Zillow was before I ever mentioned it. If you look at the WaPo article all the comments are by other realtors, so I'd take those comments with a grain of salt. Oddly, my mortgage guy never looked at Zillow (that I saw) for figuring out values, so shrug . I'm sure the data is inaccurate, but it's somewhere to start the conversation and let…

> each realtor I talked to brought up how terrible Zillow was before I ever mentioned it

So people who take percentage of the deal disparaged a tool that would net them less money...quelle surprise.