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How Bad Are Zillow “Zestimates”?

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Re: How Bad Are Zillow “Zestimates”?

#81

Post by jerf »

sixdrum wrote: post #60

The Zestimate for my house is incredibly close, within $2k of a recent appraisal. There are a lot of comparables in the area, so they have a decent amount of data to work with. I have a friend who just bought a 3,000sf house on 1/2 of an acre in Lexington, VA for $31k. Zillow has it at $400,000. He's either incredibly lucky and should buy me a beer, or Zillow is the worst. Leaning towards the latter.

"$31k. Zillow has it at $400,000."

Drop a 0 there? It seems likely that $31k would go beyond lucky into probable theft....

Re: How Bad Are Zillow “Zestimates”?

#82

Post by eanzenberg »

bertjk wrote: post #68
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.

I'm pretty sure that when they say they start with Zillow, they are referring to the feature where it shows recent past sales in your neighborhood, which is an entirely legitimate input into determining a formal appraisal.

Zillow should use that data to actually make estimates. Because they clearly don't, and don't really know how to do predictive analytics.

Re: How Bad Are Zillow “Zestimates”?

#83

Post by sidlls »

ensignavenger wrote: post #26
sidlls wrote: post #17

Earlier quoted context omitted.

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 cond…

The standard HUD uniform residential appraisal report requires a cost to build estimate. I have never seen one without that estimate completed. However, I bought a home last month which had 2 different appraisals done on it, and neither one had any weight given to the cost to build. (Despite the fact that the appraiser claims otherwise, I can mathematically prove that there was no weight given to that method.)

Yes, but the estimate provided there is, in my experience at least, rarely computed rigorously. And even when it is, I've never seen it used as part of the appraisal.

Re: How Bad Are Zillow “Zestimates”?

#84

Post by mundo »

Wait - is the author just measuring Zillow's accuracy the same way Zillow does? As in, "Here's a poll that asked N people something. Let's check the poll's accuracy by calling 3 of those people and asking them the same question again."

That seems... not useful in any way.

Re: How Bad Are Zillow “Zestimates”?

#85

Post by gohrt »

eanzenberg wrote: post #80
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.

Terribly scary that a huge financial decision would depend on giving signing up and giving data to some website.

In the past it requires that you report the data to the local permitting board.

Re: How Bad Are Zillow “Zestimates”?

#86

Post by jrochkind1 »

eanzenberg wrote: post #82
bertjk wrote: post #68

Earlier quoted context omitted.

I'm pretty sure that when they say they start with Zillow, they are referring to the feature where it shows recent past sales in your neighborhood, which is an entirely legitimate input into determining a formal appraisal.

Zillow should use that data to actually make estimates. Because they clearly don't, and don't really know how to do predictive analytics.

What is it that makes it "clear" to you they aren't "using data"? What else could the estimates possibly be based on but "data"? You think the computer just randomly chooses a number?

Re: How Bad Are Zillow “Zestimates”?

#87

Post by dpandey »

Zestimates are only reliable as an 'in the region of $X' indicator. Seen multiple houses where this issue exists. I'm sure those are not the only ones.

I know Zillow doesn't make a claim about being super accurate, but not everyone is an intellectual buyer doing math in their head. For a lot of people, they treat zillow as a roughly true indicator and are surprised when that doesn't match reality. Or they completely dismiss it in the very beginning and rely on their agents or intuition.

You'd be surprised how seriously people who aren't quant inclined can take a prediction or estimate. Well, given that all the quant inclined among us believed Hillary would win, it's obvious that humans tend to put trust in other people's estimates if they essentially trust those people would do a good job unless proven otherwise. It reduces the cognitive burden of calculating it ourselves.

Re: How Bad Are Zillow “Zestimates”?

#88

Post by tyingq »

danans wrote: post #64
tyingq wrote: post #16

Earlier quoted context omitted.

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

Unless you think they should never update their algorithm, approach (2) is just making the chart consistent with itself. The useful part of these charts isn't really the current Zestimate, but rather the trend line of the home values, especially at the neighborhood level. If you don't recalculate the historical values, then you break the ability to see the trend line. If you really want to see the results of previous…

Every county in the US that publishes historical valuations seem to get by without overwriting history.

Re: How Bad Are Zillow “Zestimates”?

#89

Post by byoung2 »

Neliquat wrote: post #48
EpicEng wrote: post #37

Earlier quoted context omitted.

If appraisals are not accurate, then what is the definition of 'accurate'? Appraisals are what the lender relies upon to verify the mortgage amount. I also highly doubt that number.

Sales price is really the only 'accurate' statement of value.

In a way, that's true and false. A house may be worth $500k, and you might get a dozen people to offer $500k, but if someone comes along and wants to buy back her childhood home for $1 million for the sentimental value, isn't the house still only worth $500k? The next buyer will still think the house is only worth $500k.

Re: How Bad Are Zillow “Zestimates”?

#90

Post by harrumph »

Given that the company's own CEO didn't use his own company's "Zestimate" when it was time to zell his house, I think the accuracy of the number is fairly perceived to be zub-optimal.

"You gotta eat your own dog food," goes the old zaying.

http://www.inman.com/2016/05/18/zillow-ceo-spencer-rascoff-s...

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