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 be seen and the past year is a smooth, barely sloping line. Never was there any indication of why they had a 15% drop, which was particularly frustrating when trying to determine how much to offer for the house.
How Bad Are Zillow “Zestimates”?
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Re: How Bad Are Zillow “Zestimates”?
#42Redfin does a much better job with estimates and track their error rate: https://www.redfin.com/redfin-estimate
Re: How Bad Are Zillow “Zestimates”?
#43Earlier quoted context omitted.
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.
When you refinance the bank usually hire someone independent to estimate the value of a property. I did it before Zillow, and they start with the property value as estimated by the city for tax purposed and look at recent sales that are similar in the area, and adjust.
Yeah, usually either a professional appraiser or a real estate broker- neither one should be relying on data from Zillow, both usually would use data from a local MLS.
Re: How Bad Are Zillow “Zestimates”?
#44Earlier 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.)
I can't imagine any scenario where cost to build would weight into appraisal.
Re: How Bad Are Zillow “Zestimates”?
#45I don't know how accurate these things are, though my gut tells me not to trust them. That said, as a recent home-buyer, I can state without uncertainty that real estate agents hate Zillow, and Zestimates in particular.
I concur. Though I tend to find this attitude pretty ridiculous since the status-quo home valuation process is just as bullshit at the zillow strategy is.
Status Quo in my experience goes:
1. List your house (usually at slightly above whatever the realtor thinks it might sell at)
2. Someone's willing to buy at listing price +/- 5%
3. Bank sends an appraiser whose job it is to figure out what a house is worth (guess what: see #2 for relevant demand evidence), and magically the number comes remarkably close to the price sorted out in #2 massively most of the time
I've never heard a real estate agent complain that zillow's numbers are too low, mind you... only ever that they're too high, which makes sense to be frustrated by if your biggest challenge is controlling your time-costs.
Re: How Bad Are Zillow “Zestimates”?
#46Earlier quoted context omitted.
Comparables are what a Zestimate is without the BS "special sauce" that Zillow makes you think exists. Comparables are free, and based on existing property market data (typically sold similar properties looking back a certain period of time). https://www.biggerpockets.com/rei/real-estate-comps-house-va... Yet again the tech community believing a problem exists to be solved that has already been solved. > In most mark…
In most markets comparables are acquired through an MLS database, and access to MLS is usually not free. You can hire or become friends with a real estate professional that pays for access to MLS (or become one yourself). But before sites like Zillow, there wasn't anything like it easily available to the average person.
> But before sites like Zillow, there wasn't anything like it easily available to the average person.
Zillow unfortunately doesn't help though, as no one takes the value seriously (except perhaps uneducated consumers entering the real estate market). Bad data is worse than no data.
Re: How Bad Are Zillow “Zestimates”?
#47Earlier quoted context omitted.
From time to time, Zillow rejiggers (that's a technical term) their algorithm, resulting in sudden readjustments of estimates. Given that the Zestimate itself is presented as a fairly wide range, the error margin is hardly hidden. Also, it is important to remember that no appraiser from Zillow has actually looked at your house; the data is drawn entirely from sales data, public records, and volunteered information. S…
point taken, but two observations: 1) its ridiculous to also "fix" the zestimate history. Put the old one in the history, and explain near the chart what rejiggered. 2) The market in my immediate area, as evidence by the comps from zillow and the sales prices in the newspaper, has only increased. The conservative comps are near the old zestimate - this is a suburban area. The wild ones are higher than my private esti…
I think what you're actually seeing is the output of a Kalman Filter temporal model. The zestimate is the mean of the filter output, but the error bounds of the filter are more important than the actual mean/reported value.
What happens is that the model uses trends to extrapolate from each "real" data point (in this case, a house sale in your neighborhood). The problem is, and what Kalman Filters help manage, is the uncertainty propagation between each house sale. When it has been a long time from when a sale has occurred, it is unclear what the real/actual price is of a home. This means that on the estimated price the error bounds are large, and zestimate still just reports the mean value of this huge uncertainty.
What then happens is that a house is sold in your area, a new data point is recorded, and the filter re-adjusts itself and collapses its uncertainty/error bounds in the time of that measurement around the measurement. And you get correction. This is why the "old zestimate" is updated.
Re: How Bad Are Zillow “Zestimates”?
#48Earlier 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.
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.
Re: How Bad Are Zillow “Zestimates”?
#49I find Zestimate over time to be useful. I've been watching my Arizona property climbing up since 2010 when it was estimated at rock bottom, or about 50% of its purchase value (sigh). Now it's estimated to be about 90% of its pre-crash value. But as with all private transactions, bottom line it's worth what someone's willing to pay for it.
Re: How Bad Are Zillow “Zestimates”?
#50Earlier quoted context omitted.
From time to time, Zillow rejiggers (that's a technical term) their algorithm, resulting in sudden readjustments of estimates. Given that the Zestimate itself is presented as a fairly wide range, the error margin is hardly hidden. Also, it is important to remember that no appraiser from Zillow has actually looked at your house; the data is drawn entirely from sales data, public records, and volunteered information. S…
point taken, but two observations: 1) its ridiculous to also "fix" the zestimate history. Put the old one in the history, and explain near the chart what rejiggered. 2) The market in my immediate area, as evidence by the comps from zillow and the sales prices in the newspaper, has only increased. The conservative comps are near the old zestimate - this is a suburban area. The wild ones are higher than my private esti…
Yes, the little chart they show you has no history--it just extends back from the current data and the current algorithm. So what it shows you now as they value five years ago is different from what it showed you five years ago. In that sense it does not function as actually tracking the market. Does it really need to? What do you really care about beyond what you originally paid and what you might sell it for if you have to?