How Bad Are Zillow “Zestimates”?
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How Bad Are Zillow “Zestimates”?
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Re: How Bad Are Zillow “Zestimates”?
#2More 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 would tell you exactly that up front.
Re: How Bad Are Zillow “Zestimates”?
#3SF 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.
Re: How Bad Are Zillow “Zestimates”?
#45M home sales yearly, so this shouldn't be done by anecdote.
Re: How Bad Are Zillow “Zestimates”?
#5While we're at it, lets also figure out why my Zestimate dropped $40k overnight two months ago. If I was planning to sell, I would have a huge problem on my hands. On top of it the Zestimate chart shows no indication that they dropped it $40k. Aiming to fix the number is a fool's game : my "private home estimate" on my owner dashboard is 23% higher.
Its a worthless number, and they should stop trying to manipulate the market. Having a secret measurement formula that works for 70% of the houses but not the other 30% needs to either have a disclaimer that its all fantasy, or just outright be removed. I'm guesstimating those 70/30 numbers, but their site gives some locations 2 stars on their own scale: http://www.zillow.com/zestimate/#acc. If its not 4 stars, then don't publish it.
Re: How Bad Are Zillow “Zestimates”?
#6In 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).
Interestingly, Zillow recently bumped up our Zestimate from $190k to $230k. What's puzzling is that they also bumped up the historical Zestimates—there isn't a big jump shown on the graph on their site (though there is a big jump shown in my Personal Capital account, which uses Zestimates as part of their net worth scores). Either they modified their algorithm in a way that affected values retroactively, or they're trying to disguise the fact that their previous Zestimates were way off.
Re: How Bad Are Zillow “Zestimates”?
#7Interesting. While I agree the results are likely to be inaccurate, this case study targets only the three largest cities in the US. Urban centers probably aren't the best population from which to sample.
In a case like this, we'd probably want to use locations based on number of home sales; and even then, we'd need to account for the amount of time between homes changing hands i/e houses that are flipped. There's likely something to be said about the difference between the nation's average sale price and each area's average sale price; assuming that may affect Zillow's estimations.
Anyways, I like that you're doing studies like this, regardless.
Re: How Bad Are Zillow “Zestimates”?
#85M home sales yearly, so this shouldn't be done by anecdote.
That was my first thought as well. Analyzing 3 houses in 3 markets... It's an interesting look, but I wouldn't consider any takeaway message to be necessarily accurate.
Algorithms have outliers, and quantitative analysis requires adequate sample size.
Re: How Bad Are Zillow “Zestimates”?
#9In 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…
> Either they modified their algorithm in a way that affected values retroactively, or they're trying to disguise the fact that their previous Zestimates were way off.
Probably the latter. Although, it could be that the data points are calculated on the fly or starting from some arbitrary value.
Then again, since it's shady to begin with, disguising their mistakes wouldn't surprise me.
Re: How Bad Are Zillow “Zestimates”?
#10I don't have an opinion on whether zestimates are accurate. But this blog post has 9 samples from only 3 cities. And the author seems to be making claims based on that. This is a lame "thought leadership" post as a subtle ad for his company.
At least give me 10-20 homes in each of 10-20 cities if you are trying to convince me of something systematic.