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

Re: How Bad Are Zillow “Zestimates”?

#101

Post by bshep » Mon, Dec 05, 2016, 6:13 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…

As an example of above, A couple of years ago my wife and I were selling our home and the appraisal came back lower than agreed sale price, we asked appraiser to pick different comparables and the appraised price went up 10-20k

Re: How Bad Are Zillow “Zestimates”?

#102

Post by arthurgibson » Mon, Dec 05, 2016, 6:18 PM UTC

bshep wrote: post #101

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…

As an example of above, A couple of years ago my wife and I were selling our home and the appraisal came back lower than agreed sale price, we asked appraiser to pick different comparables and the appraised price went up 10-20k

Thats interesting, why would the seller have any control over the appraisal? The mortgage broker who requests the appraisal is typically working with the buyer.

Re: How Bad Are Zillow “Zestimates”?

#103

Post by jsjohnst » Mon, Dec 05, 2016, 6:19 PM UTC

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.

Like the previous reply, I'm going to assume you meant $310k, not $31k, as $31k for that property doesn't make sense based on the factors you listed unless the place is a dump.

As to the disperity, this could be easily explained by seller factors. Maybe the house is actually worth $400k, but they needed to sell it, even if less than it was worth (had a contract on another home, home was a foreclosure, etc etc).

Re: How Bad Are Zillow “Zestimates”?

#104

Post by sixdrum » Mon, Dec 05, 2016, 6:23 PM UTC

jsjohnst wrote: post #103

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.

Like the previous reply, I'm going to assume you meant $310k, not $31k, as $31k for that property doesn't make sense based on the factors you listed unless the place is a dump. As to the disperity, this could be easily explained by seller factors. Maybe the house is actually worth $400k, but they needed to sell it, even if less than it was worth (had a contract on another home, home was a foreclosure, etc etc).

I did not drop a zero. He paid cash.

Re: How Bad Are Zillow “Zestimates”?

#105

Post by sixdrum » Mon, Dec 05, 2016, 6:25 PM UTC

jerf wrote: post #81

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....

It was an investment property that needed some work. He had to put about $10k into it, but it's good to go now.

Re: How Bad Are Zillow “Zestimates”?

#106

Post by hanoz » Mon, Dec 05, 2016, 6:26 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…

> "around 90% of the listing Zestimate is “Within 20% of Sale Price” of the home"

Yes, this sounds pretty good to me. I spent some time trying to do something sophisticated for the estimates on my site https://houseprices.io/ using repeat sales of similar properties weighted by distance, but I wasn't getting anywhere near that. I gave up and just used the Land Registry index for the county in the end. There are just so many potential local factors which you're never going to capture algorithmically, not least of which is how much the current owner might have spent doing it up. Although I do get the occasional irate message in my Contact Us form telling me exactly how much!

Re: How Bad Are Zillow “Zestimates”?

#107

Post by iamthepieman » Mon, Dec 05, 2016, 6:27 PM UTC

I bought my home for 139,000 4 years ago. The bank appraised it at 155,000 while i was buying it (also 4 years ago). The town has it appraised at 178,900 since 2011 Zillow's "Zestimate" has it at 134,500

If we go by the "market" rate of what it would/could actually sell for then Zillow is the most accurate out of all those estimates.

Now I've done quite a bit of interior work to the house and Zillow's is most likely off by quite a bit now that my house has a new kitchen and bathrooms but I'm not sure how it could take that into account since there's no way for that data to reach Zillow.

Re: How Bad Are Zillow “Zestimates”?

#108

Post by iamthepieman » Mon, Dec 05, 2016, 6:27 PM UTC

I bought my home for 139,000 4 years ago. The bank appraised it at 155,000 while i was buying it (also 4 years ago). The town has it appraised at 178,900 since 2011 Zillow's "Zestimate" has it at 134,500

If we go by the "market" rate of what it would/could actually sell for then Zillow is the most accurate out of all those estimates.

Now I've done quite a bit of interior work to the house and Zillow's is most likely off by quite a bit now that my house has a new kitchen and bathrooms but I'm not sure how it could take that into account since there's no way for that data to reach Zillow.

Re: How Bad Are Zillow “Zestimates”?

#109

Post by acdha » Mon, Dec 05, 2016, 6:27 PM UTC

20years wrote: post #54

Realtors who feel threatened by Zillow love to complain about Zestimates. Zillow has made it clear time and time again that they are not 100% accurate and even allow homeowners to edit them. Zestimates are a tool that homeowners like to use. Zillow knows that. Good Realtors won't feel threatened by it but instead leverage it to provide prospects with a much more complete and accurate estimate. Realtors need to stop b…

Zillow deserves a fair share of the blame because they prominently feature a single number with dollar-level precision and bury the caveats multiple clicks away on a separate page.

Some basic UI changes could avoid all of that: e.g. instead of showing $123,456, show a range like $115,000-135,000, and keep the last few digits at zeros based on their estimated error rates. Similarly, their graphs could use shading to make it clear that they're showing the mid-point of a range rather than a discrete value.

Re: How Bad Are Zillow “Zestimates”?

#110

Post by ffjffsfr » Mon, Dec 05, 2016, 6:32 PM UTC

It's not suprising that estimates based on "user-submitted data points" are not accurate. Everyone who ever tried to sell a house knows how difficult it is to estimate real market price of property. Usually people will submit higher valuation of their house so that they can negotiate it down in case their valuation is not realistic. It is better to give higher value so that you have room for negotiation. Transaction prices will always differ from listing prices.