Appraisal News and Business Tips

Zillow (in) accuracy

Inaccurate Zillow ‘Zestimates’ a source of conflict over home prices
By Ken Harney
Excerpts: Zillow CEO Spencer Rascoff…says Zestimates are “a good starting point” but that nationwide Zestimates have a “median error rate” of about 8%.
Shoppers, sellers and buyers routinely quote Zestimates to realty agents – and to one another – as gauges of market value. If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers’ list price of $425,000. Or a seller might demand to know from potential listing brokers why they say a property should sell for just $595,000 when Zillow has it at $685,000.
My comments: Ken Harney is a long time, nationally syndicated real estate writer. Hopefully, people will read this article. Lots of people I know tell me what “values” they are getting from Zillow. Zillow collects lots of sales data. But, I suspect they are using a radius search or something else that does not match a neighborhood at all for their AVM. I do love the Zillow data and graphs though. Look ‘behind” the Zestimate. As we all know, AVMs work best in conforming homes in conforming tracts less than 10 years old, and goes downhill from there.

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8 Comments
  1. Zestimates are an excellent illustration of appraisal wannabes, whether they are named AVMs, BPOs or Zestimates. And Zillow’s existence and apparent success underscores the popularity of end running the appraisal standards by using something that is free or low cost.

    Looks like we have a way, maybe a long way, to go when it comes to having the public’s trust and the public being willing to pay for something of value (pun intended).

    The situation is also an explanation of why being an appraiser is so frustrating. We alone are regulated when it comes to expressing an opinion of real property value, everybody else gets a free pass and most of the public doesn’t know the difference.

  2. I’ve been an appraiser for 26 years in 4 states. Zillow, in my opinion, is an abomination.
    I have had underwriter’ respond to my carefully researched appraisal with a quote from Zillow and expected me to respond. It isn’t of a little, in my opinion, it is off a galloping, gargantuan amount. It loves high numbers. Don’t we all? Unfortunately a licensed appraiser is required to support his/her opinions. Zillow, at best and at worst, is a joke. Anyone who relies upon it – was that a review appraiser saying that he/she did?- is beyond foolish. As another reviewer said, Zillow should come with a warning label. I’d go so far as to provide that label: “The Zillow estimate is not just misleading, it is worthless”.

  3. Zillow is has some good info but their Zestimate is often a form of amusement around the office. Of the last 10 appraisals I completed, 4 differed by as much as + or – 40% of the Zestimate. 4 were between + or – 13% to 25% and 2 were less than 8% different.

  4. I looked at Zillow until my parents’ death and the sale of their property. It included a 5,000 sf home built in 1810 and listed on the National Register of Historic Places. Also, the Swan Pond for which the district was named is located on the 70 acres along with a log spring house, a huge barn, and a shop. They compared this property with new houses on postage stamp lots. Additionally, the house has been sold for more than a year, and Zillow continues to have the listing active. Although I tried to contact them, I was unsuccessful. What a mess.

  5. I really only use Zillow to check property value trends in specific zip codes. It’s a rough check of indications I see in appraisals I review.

    • Zillow is always soaring skyward on valuations in my extensive experience. Guess how that shows up in trends? For heaven’s sake, your clients deserve more from an appraiser than someone who takes any information whatsoever from Zillow!Z

  6. Like cigarettes, Zillow should come with a warning label

  7. When there is a discrepancy between the Zestimates and the agent’s opinion of value, why aren’t the agents suggesting an independent 3rd party opinion from a valuation professional., a professional real estate appraiser .

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