Zillow is Worthless, Must We Discuss Further?
Zillow is a fun little website that attempts to give you an estimate of your home’s value. They call it a “zestimate,” which is almost catchy, but not quite. Zillow is a great tool if you want skewed or inaccurate information regarding the value of your home.
Because it’s so inaccurate, it’s pretty much worthless for estimating the value of your home. It may give you a ‘ballpark’ figure, but in the case of my house it was off by 100k, which is nowhere near the ballpark.
For whatever reason, there seems to be a lot of people in the online real estate community that are obsessed with Zillow. I don’t really understand this obsession, although it’s important to educate your clients about the useless and possibly misleading nature of Zillow.
My reaction has always been “it’s not accurate enough to be meaningful, and even if it was accurate, you wouldn’t have any way of knowing without doing an actual comparison of comparable sales in the area.”
So why not just do a competitive market analysis (CMA) in the first place and avoid that annoying step in the middle that involves going to a pointless website?
The only real way to find the true market value of your home is to sell it. It’s only worth what someone else will pay for it. If you want to estimate what it might sell for, then you need a CMA, which is a fancy way of saying “look at similar houses in your neighborhood that have sold recently and see what they sold for.” It’s more complicated than that, but you get the gist of it.
Real estate agents are generally a good source for a CMA, more for their access to sales data via the MLS, and less for their heightened powers of estimation, although a good agent should be competent at judging the value of your home and knowing the ‘pulse’ of the market. For a serious appraisal, you need a licensed appraiser.
If you’re an investor and you’re relying on Zillow to generate your comparable data, then you probably won’t be in business much longer. If someone tries to sell you a house based on its Zillow estimate, then they’re either clueless or trying to pull one over on you.
Update: This (bawld) guy has sense.
“useless and misleading”? It’s a research tool. Of course its not the same as an appraisal, but if left in proper functional context, it can be a valuable tool particularly in markets with high accuracy such as California.
Bob - I appreciate the kind words. It’s hard not to make nonsense out of Zillow.
Jenny - A research tool has value only if it actually has at least some degree of reliability. Zillow does not. If you take 100 homes in any area at random you’re lucky if Zillow gets you within 2% for 10 of them. Using that as the gold standard it’s not hard to understand the tremendous failure rate of agents for the last 35 years.
It’s a glorified version of Pong.
Some truly are obsessed, others are writing for the blog headline to generate readership.
Still, just because Zillow largely is bunk doesn’t mean that it is totally irrelevant if only because our clients (and our prospective clients, those with whom we have no working relationship) are looking at these figures and either consciously or unconsciously spending the dollars Zillow says they ought to receive.
Zillow’s been beaten to death as a blogging topic, but so have a number of different topics.
Zillow is a hot topic & I agree w/ JD that it has been blog fodder for a long time. We finally got Z out of our system in a Zlitzkreig. Unless there is news, we’ll probably move on. Also, the letter Z has been overworked–we should give that letter a rest
But Jeff is right. A tool that works only some of the time is not a true tool. It’s accuracy is unpredictable in the individual case. A quick analogy I read somewhere—you can use a screwdriver to open a bottle of beer but a bottle opener works a lot better. Zillow is a screwdriver. If you’re lucky, the cap comes off quickly & ahhh—if not, you end up with a broken bottle, a cut hand and a wasted brewski. Use the bottle opener, why dont ya.
One last point—the fact is the data may not meet the “hallowed 3 test”– accurate, complete & fresh. How do you know? The zestimate can’t self validate. So you will always need a human to look at the data & see if its accurate, complete & fresh– What a CMA or appraisal does anyway. Zillow just adds another step to deal with.
Zillow Backlash is everywhere!
Everyone is talking about how tired they are from reading blogs about Zillow all the time.
“I can’t wait to read blogs with titles like these for the next two months.”
Allen
It was kind of nice how the Zestimate for my house was about $100k too high. I wish it was accurate.
Hey,
I love what you’e doing!
Don’t ever change and best of luck.
Raymon W.