How Accurate is Zillow?

Do you use Zillow?  Although I am not planning on buying anytime soon (as in within the next year, maybe two), I spend quite a bit of time viewin available properties in the areas that my Fiancee and I would consider buying.  Every time I find something that looks attractive on ZipRealty, I head straight to Zillow.com to see if they agree with the pricing.

In case you're not familiar, zillow.com is a free home value estimator web site.  They use metrics such as square footage, local comps, sales records, type of dwelling, etc. to determine an estimate, they call a Zestimate.

It generally seems to be in the ballpark of what you would expect.  The fun part is that Zillow offers Zestimates for all properties, not just the ones on sale.  Curious about your neighbors?  You can view their square footage, assessed value and property taxes paid.  You can also view the past sales data on their house.  This may be a case of TMI, but it's all public info anyway.  Zillow just made it easy to access.

So, when I am researching homes, I find that Zillow often prices homes under the asking price.  This is not too surprising.  Anyone watching the market in most of the "bubble" areas knows that sellers have been stubborn about lowering prices, but watching inventories rise, and sales slow.  To this point, I commend Zillow for getting it right.  Sometimes, the Zestimate is above the asking price, to which you have to wonder, "then why hasn't it sold?"

In fact, in my neighborhood, there is a house that has been for sale for quite a few months.  I'm not sure how long exactly, but I went to their open house at least four months ago.  The listing does not provide any useful information, because they pulled the listing and reslisted it to reset the "Days on Market" number.

The house was originally listed for $890,000.  It is a 3 bed/3 bath house on 5700 square feet.  I originally thought it was too high.  They have since come down to $850,000, but still it site, vacant, hosting a weekly open house.  What does Zillow think?  They're close, the Zestimate is $853,141.  The house is newly remodeled inside, so all new counters, cabinets and fixtures.  So, if it's worth $853k, and they are asking $850k, why hasn't it sold?  Wouldn't a buyer have at least come close to the asking price, and a deal struck?

That's the problem with estimating values based on comps in a rising inventory, buyer's market.  The most recent sales are not necessarily valid.  The top three comps used for this Zestimate had a most recent sales date of June 2006 for one, but January 2006 for the other two.  In this market, the difference between January and June (almost July) is significant.

The bottom line:  Zillow is a fun and useful tool, but don't bet the house on it.

Comments

[financial freedumb]

I never realized how public property taxes and home values are...Zillow.com is definitely a cool tool. In Hawaii, you can use Honolulu County Public Access and see who owns it in addition to taxes, sq footage, etc.

[Todd]

Zillow uses public records which should show the last sale price, or the current assessed value.
In my case, it's off by about $30,000 as the assessed value is not in line with actual market conditions which have the prices higher. (Lower assessed value means my taxes are lower, so I'm not going to complain.)
I just access my county courthouse online to lookup recent sale/previous sale prices to get an idea for what a house I'm interested in is selling for.

[Laws Finance]

I have found Zillow to be pretty inaccurate in my area. But it is better than nothing. It does give some house specs, even though the price may be way off.

[mapgirl]

The Washington Post's Real Estate section has a Recent Sales database that looks up the county records for sales. It's rather interesting since you can search by name, street address, etc.

[David G]

Hi, it's David G from Zillow.

The short answer is that "it depends on where you are". We measure and report our accuracy by metro area, state and county -- you'll find that data here: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

Note that we also report data coverage on that page -- there's a strong correlation between the amount of data we have and our Zestimate accuracy -- as we collect more data, accuracy will further improve.

Thanks for posting.

[lamoneyguy]

Whoa, Zillow commented on my blog. How crazy. Thanks for the comments David G. As I mentioned in the post, I think Zillow is an awesome tool, but obviously, home buyers or sellers should do their due dilligence to determine a fair price.

[seattle]

I love Zillow!! I do agree though that Zillow prices are a bit high, at least for the market I live in. It so comes down to the individual house, I don't know how they will ever really really nail the pricing model. But, here's what I like about Zillow: One : it gives you more data. It gives you comparison data points such as other homes in the neighborhood and their value, plus what they recently sold for (if they have recently been sold). Can also give you data such as whether or not the improvements done on a certain house went through a permit process (thus increasing the value of the house; the flip of this is if you know of a house that has been improved upon, but the assessment hasn't gone up, well that's due to no permits, which can be a bad thing). Two: you aren't dependent on the realtor anymore for setting price or setting bid offer. I would have lovedlovedloved for Zillow to be around when I bought my houses (I have bought 3). I had no other sources for setting an offer except my gut and my realtor pushing a certain bid. With realtors getting 6% commission, it's time for a new model, folks.

[Mike A]

I love Zillow too, but the prices are way off for Massachusetts & Florida. It is a great tool otherwise, and I Zillowed every house I looked at when I moved the Florida. Another couple of years and "zillowed" will be added to the dictionary. I know Realtors hate it!

[H. L.]

I used Zillow too when I was searching to buy the land that I now own. Zillow may be accurate in Metropolitan areas, it's not so accurate in less populated areas. Also, Zillow does not consider the view (which is a significant factor in home price) of the property in its calculation. And Zillow is not up-to-date in areas where homes sales are sporadic. There's a house next to the land I bought, but it's still listed on Zillow as vacant land (although based on county record, the house was completed almost two years ago). Despites all that, Zillow provides a good negotiating tool. If you use Zillow estimates combining it with county sales records (which is now available online), you can get a pretty good idea what the proprty is worth without using an agent.

[Ryan Ward]

The short answer is that Zillow is a waste of time for consumers and was created by a group of people who think that real estate commisssions are too high.

Anyone who has any experience at all with buying and selling homes and has taken the time to check, knows what a worthless waste of time zillow is.

The old adage you get what you pay for comes to mind quickly when I think of companies like zillow and Trulia. These are third party listing sites that are creating middlemen in real estate transactions that will ultimately cost consumers more money - not help. Tech savvy REALTORS and consumers alike need to come to understand that they are actually bad for real estate and for consumers before they begin to cost consumers more money. It's bad enough that they have been able to fool as many consumers as they have. Why should anyone give them information that can already be had for free so that the can start charging people like me for my information which I am already happy to provide?

As a REALTOR, I love them. The estimates are so bad, it makes them look inadequate and me smart.

[Ron Astak]

Zillow.com should change the name from "Zestimates" to a more appropriate name "GUESS-IDIOTS"

[blogger]

Well the accuracy of Zillow is quite bad. I live in a townhome complex and they rate several house on my block zillow says are worth 100-150k more than mine despite having fewer options and selling for less than mine when the builder made them.

Why? Because they were resold during the peak of the bubble, so somehow Zillow thinks they are worth more than mine which has never been resold.

Zillow is junk.

[Gresham Real Estate]

I think zillow is a great tool. I have worked with it many times and would recommend it. I would always double check the subject property against comparable properties, the computer sometimes misses very crucial things when it comes to determining the exact true current market value. But still one of the best tools online.

[Zillow lover]

zillow is great. Something has gotta break down the realtor market. 6% give me a break, for what?

[colorado]

Zillow doesn't take into account a few things that can change value of a home by as much as 100k.

The do not take into account ranch square foot pricing compared to 2 story square foot pricing. In Colorado ranches are appraised at a higher square footage than 2 stories.

Zillow also does not take into account basements. Basements are huge on how much a home is appraised for. Full basements are more than 1/2 or no basements. Full walkout basements are appraised at the highest value per square foot.

Zillow does not take into consideration home backing to open space either.

Zillow is worthless. If you really want to know the value of a home get an appraisal done. It is worth the money.