Zillow "Zestimates" - in the ballpark or not?

Bridget HelmNovember 14, 2012

According to zillow and trulia, the house that we want to purchase was purchased by the current owners 5 months ago for $320,000. The source of the selling price is listed as "public record".

Now, these same owners are trying to sell the same home for $552,000. To make matters worse, last month they were asking $585,000. There have not been any updates or anything that makes sense for this huge jump in price. There's no shopping center that moved in etc. Nothing that makes sense.

The "Zestimate" on Zillow is $363,000. This price seems reasonable to us, considering the location and price per square foot of other homes in the area.

However, this particular home is a midcentury home built in 1960. Many would consider it "ugly" and it's definitely not of the same architecture of the other homes in the area. As far as "finishes" go, there are no jacuzzi tubs (which I detest, anyhow, but you get what I'm saying,stainless steel appliances, or marble countertops; as there are in the neighboring homes. The other homes are Acadian styled, which is what people down here in Baton Rouge are after - Acadian or French Provencial. The home we are wanting has terrazzo flooring in the wet areas. Most Baton Rougeans would snub their noses at terrazzo. My husband and I, however, appreciate the architecture along with its terrazzo. LOL!

We really want this home, but we can't spend over half a million on an old home that will need a little TLC AND continue to pay private school tuition for 4 kids. So, if we offer $350,000 with room to negotiate, would that be considered a "low ball offer"?? I think it would be, but at the same time, I think their asking price is a uhhhh, how do you say it, a highball request???

Put me in my place or sympathize with me. Am I in need of a reality check or are they?

By the way, we don't have an agent. (I don't think I want one. I make them miserable because I'm picky.) But the sellers have an agent. We have not said anything about the price to their agent. She's shown it to us and knows we are interested. But that's all. Assuming we were like most in Baton Rouge, she apologized for the terrazzo and gave suggestions of new floors, we just smiled and nodded. We left by saying that we'd call her back within the week.

Thanks everyone!

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sas95

In my experience, sometimes Zillow is way high, other times way low, and other times about right. What is relevant in the situation is that these people bought it 5 months ago for one price, did no updates of consequence, and are now trying to reap a big profit. What changed in the last 5 months to make the house worth so much more? Probably nothing. It may be for no other reason than the sellers just plain feel they are entitled to a huge reward.

Also in my experience, sellers like that are unlikely to accept any reasonable offer-- at least until no one bites at their overpriced house and they are more desperate to sell. This could take several months-- or several years. If I were you, I'd make the offer you feel is reasonable, but be prepared to move on.

    Bookmark   November 14, 2012 at 7:04PM
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kirkhall

Yup. Be prepared to move on.

Though, I have to ask--
Why are you looking at houses that expensive, if you can't afford one that expensive?

    Bookmark   November 14, 2012 at 7:32PM
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weedyacres

Don't rely on Zillow. Their estimates bounce all over the place.

Your offer should be based on recent "sold" comps, of which this house happens to be one. Do you know the sale prices of other neighborhood comps? If you decide to make an offer, do so based on what the comps say. If they're significantly different than asking price, provide the comp info to their realtor along with your offer. That shows you're reasoned and logical, and not just randomly low balling.

They may or may not get offended. Who cares?

    Bookmark   November 14, 2012 at 7:35PM
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chispa

What the owners paid 1, 5 or 20 years ago doesn't matter. Zillow can be very inaccurate in both directions. You need to find appropriate current SOLD comparables to come up with a fair price for your local market at this time. Based on your questions, you need a buyers agent. The BA will be able to look up all the comparables and come up with a market value for this house.

Does Redfin.com cover your geographic area? They have good, current information on properties that have sold, most with photos. You should have been going to open houses to get to know your market and get a feel for what things are selling for.

    Bookmark   November 14, 2012 at 8:33PM
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DLM2000

No, Zillow is not reliable. The house next door to us was valued at 850,000 and sold a month ago for 1.15 mil. What are the comps showing for recently sold in the area?

    Bookmark   November 14, 2012 at 10:24PM
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Bridget Helm

thanks for your help. i'm glad to know that zillow isn't always accurate.

we drove in the neighborhood thinking we might see something in our price range. this home was for sale, so we grabbed a flyer. i was shocked by the price, but really liked it. i couldn't believe that a mid century retro home would ever sell for that much in Baton Rouge, so i googled the address and found info on zillow. so, i guess you could say we stumbled on a house out of our range that we expected to be in our range, and then furthermore found out the owners purchased it for a price 5 months ago that was in fact in our range.

looks like it's time for an agent. the neighborhood is really small, and it doesn't seem like anything has sold in there in years. there's been one forclosure, but that's it. the original owners sold it 5 months ago. it seems as though there are many original owners in the neighborhood??

anyway, thanks for your help.

    Bookmark   November 14, 2012 at 10:30PM
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LuAnn_in_PA

Zillow has our house for ~33% of we know we can get for it, based on sales of other houses just like ours.
Totally unreliable!

    Bookmark   November 14, 2012 at 11:11PM
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ncrealestateguy

tell the listing agent that you are interested but would like to see at least 3 comps that she used to price the home. Report back here what she says.

    Bookmark   November 15, 2012 at 7:09AM
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kswl2

Zillow is only "in the ballpark" when the home is located in a subdivision or other market area of similar homes with sales within the past six months. For properties in slow moving areas, rural or semi rural, or urban areas where there can be huge price per square foot value changes from block to block ( and there are limited sales in the particular building you want) it is often grossly inaccurate.

    Bookmark   November 15, 2012 at 8:44AM
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annemouse

I would tell the listing agent that I saw the previous purchase price on Zillow and ask if that is the correct price. If so, what updates have the current owners made to justify the higher price? You could ask the agent verbally if the sellers would entertain an offer in the ballpark of "x". If not, move on.

    Bookmark   November 15, 2012 at 1:27PM
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cocontom

Could that "sale" from five months ago really be a HARP (or whatever the other one is) refi rather than a real sale?

    Bookmark   November 16, 2012 at 1:31AM
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brickeyee

Zillow is notoriously inaccurate.

It uses addresses only with little (if any) other consideration of location.

I live in infill development, but my house is the single older house (1930s) that belonged to the farm, land all built up around it now that used to be the farm.

The Zillow 'value' is way off.

    Bookmark   November 16, 2012 at 10:59AM
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Circus Peanut

Zillow is waaay off. The week we put ours on the market last month, we got 5 offers that averaged 80k MORE than Zillow had us pegged at. Totally unreliable as a reference for us.

    Bookmark   November 17, 2012 at 9:33AM
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Diane1RN

The owners can ask whatever they want but if they will get it is another thing. I am currently in a situation where it took 5 months to get approval on a short sale that I want to purchase, thought things were moving along nicely until I got the appraisal.....Wow. Almost 40% lower than the sellers bank is asking. If the home youre looking to purchase is worth their asking price. the appraisal will show that. Zillow is showing the home I want to purchase closer to my appraisal than what the bank is asking. JMO Zillow is (from their website)

within 20% of the actual sales price 74.5 percent of the time
within 10% of the actual sales price 52.1 percent of the time
within 5% of the actual sales price 30.0 percent of the time
for an overall median error rate of 9.4 percent

    Bookmark   November 20, 2012 at 8:30PM
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