I thought this blog had an interesting article on Zillow
Good article...still think the Zestimate on my home is wrong...
I KNOW the estimate is wrong on my house.
As a software developer: Zillow is nothing more than a data mining application. The results are no better than the quality of the databases that the Zillow algorithm scans.
I would guess it scans public property tax records, and maybe the MLS.
As you know, the appraised value of a home - for tax purposes - is not an accurate measure of what the home is worth.
As we say in the software industry: GIGO - garbage in - garbage out.
All of these 'free' internet sites are nothing more than a method to generate ad revenue.
It depends upon how you use the information on Zillow, IMO. I actually find it to be useful and quick resource for information in many ways, with the estimate range for individual houses being just a tiny part of the whole picture for a neighborhood.
In my area, it is the market that is off rocker, not zillow. A house I know of was purchased for $655,000 in 2005-6. It forclosed to lender this spring, with $590,000 owed. Some painting was done, new carpet was installed, and it went back on the market three weeks later for $720,000. It immediately sold for a little over the list price. This is not a fancy house! Frankly, I think it isn't worth $560,000; at the market bottom two years ago, it it would have maybe gone for $520,000.
Zillow is an easy way to keep tabs on what is happening in cities I am interested in. The change is evolving so quickly, I am sure many long-time owners are not aware of what is going on. But the market here is going to drop into a sinkhole again at some point, or at least regain some sanity.
Or, when we sell, it will be for one heck of a return on investment! :)
I also think it's useful for relative values--I do think it tracks the ups and downs of our local market pretty well, for instance, even if the actual values are off. But their algorithm works better in some areas than others. In our state, for instance, assessed values for property taxes are locked in at the purchase price with some very small increases allowed; they can go down if the market dips, but they can't go up if it rises, and Zillow is not good at accounting for this. (Our house and the house next door are literally identical, for instance, and the only "data" difference is the last sold price/date and, as a result, the tax assessment, both of which are factors in the Zillow algorithm. So Zillow often has them $100K apart in value, though right now I think it's down to a mere $30K...and no, these aren't million-dollar homes by a long shot, so that's a pretty substantial chunk of the value! ;) Our neighborhood is a mix of condos and single-family homes, and Zillow mixes these for comps here. I can always tell if our value drops that there will be 2-3 condos listed in the "recent similar sales" section, and if it goes up dramatically, it's usually because several single-family homes sold in quick succession and bumped some condo sales off the comps list. Their system also uses a mile radius, and in a city, neighborhoods can change pretty dramatically positively or negatively in the space of even a half mile. (And to that end, Zillow also includes comps within a mile of us that are in a different, much costlier city, which is also bizarre--seems like it shouldn't be hard to write an algorithm that limits the pool to like properties within city limits.)
I suspect Zestimates are most accurate in neighborhoods where properties are assessed annually, the housing stock is pretty uniform, and adjacent cities/neighborhoods have similar amenities and values. I'm curious to see how the experiment in the OP turns out, though!
This post was edited by artemis78 on Wed, Aug 14, 13 at 17:25
We used Zillow to locate the vacation house. Yes, it's a data-scraping site, but it scrapes some useful information.
I just looked at zillow for my subdivision and wow is it off.
We are listed as worth quite a bit below our assessed tax value (hmmm I wonder if the tax assessor will accept zillow numbers and drop our assessment!?), and 2 bathrooms less than what we have in the house (the 5 bathrooms were here when the house was built 40 years ago). The next door neighbors are listed for even less than we are according to zillow, and the house next door sold earlier this year for over $50K more than their zillow "worth" (not a million dollar subdivision).
I tend to ignore zillow... the data just isn't very good/current in my area.
Because the homes in my area are not all the same... we have quite a hodge-podge of sizes of track homes mixed with custom the zestimates are wayyy off on them.
They have my assessment lower than my neighbors, yet I have more square footage and a bigger lot.
The home across the street definitely has the wrong Zestimate and to make matters worse they even have the address wrong!
So I wouldn't trust the Zestimate of zillow at all.
It has its uses. As a home buyer, it was very helpful.
I found the house I bought by searching on Zillow, so I don't think you can't say it's nothing but advertising.
The "zestimate" is garbage, though, as is the "make me move" feature.
This post was edited by Violet.West on Fri, Aug 16, 13 at 16:22
Listings for my state are very close because our sale prices are public. It's nice to see the whole sale history on our 14yo home. Only problem is that we can't know how much of that sale price was given back to the new buyers in concessions.
I haven't read all the above posts....
Here is my take on Zillow:
I suspect that the Zestimate is much more accurate in regions where there are a lot of similar houses, lots of traffic, lots of sales.
I live in a rural area in which in the best of times has three single family homes sell in a month. Many months, not even one single family home sells. And, the properties are really all over the place in terms of age, condition, and lot size. My house is on the market right now and I think it is very telling that all realtors we talked to had to go back 8+ months to find even one property which was somewhat like ours, and even then the "comp" was very different. Of course that means the CMA is far less accurate than it would be somewhere else.
In my area, I have no idea what the Zestimate is based on. One might assume it would be based almost entirely on assessed value, due to lack of much other information, but instead it seems to have no relation to assessed value. Our Zestimate right now is over $30K under assessed value, up from $50K under a few months ago. (This is a house only assessed for about $200K.) Meanwhile other houses within a 1 mile radius which are assessed for less have Zestimates tens of thousands higher. It's not like Zillow knows the details of condition, finishes, etc., so it's not using details like that to alter the Zestimate in those cases.
If you are looking for relative values, I'd used an assessor's database.
I used to use Zillow for historical listing information until I put my own house on the market and realized that, other than sales, Zillow only reflects changes made on Zillow... and not all changes are made on Zillow. You cannot assume that "listing removed" or lack of "listing removed," or price reductions, or lack of price reductions, or pending sales, or lack of pending sales, are accurate. And you can't even assume sale prices are accurate and they don't indicate things like sales to relatives which are below market value, construction loans, refinances which sometimes show up as sales, etc.. In short, the details of the sales are not included. Zillow can show that a house sold, say, 5 years ago, when in reality the current owner has been there 20 years and never sold it. And that's not even including outright incorrect information where details for one property ends up in the profile of another.
I used to think I was savvy in putting zero stock in the "Zestimate," but using Zillow as a reliable tool for seeing listing history and price changes... until I realized that in my area, it's actually just totally useless.
I used Zillow for both selling and buying. Their zestimate is wrong but gives you an idea what houses are selling for in the area. It also shows past sell prices and what a person paid for the house in the past.
When we put our house on the market, the zestimate was off by about $100,00. But, we lived in our house for 40 years and none of the changes were reflected in their zestimate. For instance, new roof, new pool, fencing, updated baths, updated kitchen, addition of a sunroom.
The website does have a section where a seller can update their information and will get a different zestimate which would be closer to the price of the house.
I found it more helpful than Trulia and easier to navigate while we were house shopping.
the Zillow (and Trulia) phone app is also great when you are driving around researching neighborhoods and see a "for sale" sign.