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

Re: How Bad Are Zillow “Zestimates”?

#91

Post by DennisP » Mon, Dec 05, 2016, 5:57 PM UTC

mcherm wrote: post #63

I am quite disappointed in the research that went into this article. (1) Author discovers that Zillow has a specific claim about accuracy: "around 90% of the listing Zestimate is “Within 20% of Sale Price” of the home". Author then gripes that this is "a really large margin for error". Really? Because I was prepared to praise Zillow for such honest and clear reporting. It only costs a few hundred dollars per home (Zi…

A long time ago I got a real estate appraiser's license. Here is the procedure for appraising real estate, as taught by my state:

1) Pick three homes that you feel are comparable.

2) Pick out the material differences between those homes and your client's

3) Make up a value for each of those differences, and adjust accordingly

(Unofficially speaking) If you don't like the number you come up with, just make different decisions in steps 1-3 until you get the number you want.

Re: How Bad Are Zillow “Zestimates”?

#92

Post by acconrad » Mon, Dec 05, 2016, 5:58 PM UTC

Whether or not the data collected in this article is questionable, there's a pretty easy way to evaluate the price of your home: re-finance / hire an appraiser. If you believe your home to be worth more, wouldn't it be worth the $200 or so to increase the value of your home by thousands by having an accurate market research from a qualified appraiser? I got mine as part of my refinance package, so I have a very accurate estimate of what my home is worth, comped out against other homes in my area that sold recently at a similar location/sq ft/etc. Not sure why you feel the need to use questionable data points like Zillow in the first place.

Re: How Bad Are Zillow “Zestimates”?

#93

Post by robbyking » Mon, Dec 05, 2016, 6:04 PM UTC

DennisP wrote: post #91

mcherm wrote: post #63

I am quite disappointed in the research that went into this article. (1) Author discovers that Zillow has a specific claim about accuracy: "around 90% of the listing Zestimate is “Within 20% of Sale Price” of the home". Author then gripes that this is "a really large margin for error". Really? Because I was prepared to praise Zillow for such honest and clear reporting. It only costs a few hundred dollars per home (Zi…

A long time ago I got a real estate appraiser's license. Here is the procedure for appraising real estate, as taught by my state: 1) Pick three homes that you feel are comparable. 2) Pick out the material differences between those homes and your client's 3) Make up a value for each of those differences, and adjust accordingly (Unofficially speaking) If you don't like the number you come up with, just make different d…

In the late 90's I worked for an online mortgage broker, and 9 times out of 10 when we ordered an appraisal, the appraiser would ask us what the selling price was and return an identical figure for their estimate.

Re: How Bad Are Zillow “Zestimates”?

#94

Post by pcsanwald » Mon, Dec 05, 2016, 6:07 PM UTC

motor_racer wrote: post #67

Zillow is beyond useless. My property consists of 4 legal "lots", two of which the house physically occupies. Each lot is assessed separately by the gov't for tax purposes. The "Zestimate" considers only the lot associated with the street address. So about 40% of the property valuation is ignored. Second, my house is lakefront. Lake frontage is probably the single biggest factor in valuing the property. Yet Zillow ig…

I have a similar situation with my condo in brooklyn, which has a deck and a great view, which doesn't count towards square footage. So the zestimate is way lower than what we paid.

We recently moved, and rented our condo, and we were able to rent it for 2k more than the rental zestimate. So, I agree that it's to be taken with a grain of salt, and not that important.

Re: How Bad Are Zillow “Zestimates”?

#95

Post by baus » Mon, Dec 05, 2016, 6:07 PM UTC

I've been working in the mortgage industry for the past few months and have learned a bit about the business.

What Zillow does with its Zestimate product really isn't that novel. There is a whole class of products available called AVMs (Automated Valuation Models) which are used in the industry which pre-date Zillow's Zestimates. What Zillow did which was innovative was brought this type of product to the general public, for free.

In some cases an AVM is all that is needed to secure certain types of loans such as HELOCs.

Re: How Bad Are Zillow “Zestimates”?

#96

Post by jsjohnst » Mon, Dec 05, 2016, 6:09 PM UTC

drewbuschhorn wrote: post #19

toomuchtodo wrote: post #15

Earlier quoted context omitted.

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.

Why would you do an appraisal for every house you looked at? If you aren't seriously interested in it, what's the point in knowing what it's worth? This might not be the best analogy, but when looking for a wedding attire, do you walk into a store and look at the sticker price of every tux/suit/gown on the rack and then decide which to buy (especially without price comparing other places)?

Re: How Bad Are Zillow “Zestimates”?

#97

Post by talloaktrees » Mon, Dec 05, 2016, 6:10 PM UTC

mi100hael wrote: post #41

Zillow's Zestimates are particularly obnoxious because they provide little detail regarding why the values change and they retroactively revise them. I bought a house this summer that had an inexplicable drop in estimated value of about 15% a month or two before the house was listed. I paid closer to the previous estimated value than the post-drop value. Now when I look at the house on Zillow, the drop is nowhere to…

This has happened to me as well.

Re: How Bad Are Zillow “Zestimates”?

#98

Post by jaxytee » Mon, Dec 05, 2016, 6:11 PM UTC

robbyking wrote: post #93

DennisP wrote: post #91

Earlier quoted context omitted.

A long time ago I got a real estate appraiser's license. Here is the procedure for appraising real estate, as taught by my state: 1) Pick three homes that you feel are comparable. 2) Pick out the material differences between those homes and your client's 3) Make up a value for each of those differences, and adjust accordingly (Unofficially speaking) If you don't like the number you come up with, just make different d…

In the late 90's I worked for an online mortgage broker, and 9 times out of 10 when we ordered an appraisal, the appraiser would ask us what the selling price was and return an identical figure for their estimate.

I purchased a home couple years ago. The appraiser I used did exactly this.

Re: How Bad Are Zillow “Zestimates”?

#99

Post by EpicEng » Mon, Dec 05, 2016, 6:11 PM UTC

byoung2 wrote: post #89

Neliquat wrote: post #48

Earlier quoted context omitted.

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.

I suppose that's kind of my point (not the parent.) 'value' is an amorphous term. Ultimately, you have comps, a detailed appraisal, and emotion to guide the purchase. There is no hard number, but the first two get you very close.

Re: How Bad Are Zillow “Zestimates”?

#100

Post by EpicEng » Mon, Dec 05, 2016, 6:12 PM UTC

honkhonkpants wrote: post #52

ensignavenger wrote: post #18

Earlier quoted context omitted.

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.

The job of the appraiser is to write down a number as large as or larger than the amount to be financed. They know this and they know the number in advance. What they do is not rigorous.

Certainly you can influence the appraiser, but the way you state it is nonsense. Their job is also to provide feedback to the buyer, they won't just pull any number you like out of a hat.