Zillow, please accept my tepid congratulations

One thing I like about Zillow is its logo. (It’s about the only thing.)

This tops a press release that Zillow issued last week:

Real Estate Information Marketplace Leverages User-Submitted Data to Add More Than 25 Million New Zestimate Home Valuations, Improve Accuracy

Boasting about an increase of its data to 100 million homes nationwide, Zillow declares:

The Zestimate median margin of error is now 8.5 percent nationwide, and below 6 percent in major metropolitan areas such as Denver, San Diego and Washington D.C.

The acknowledged margin of error previously was 12.3 percent.  (Notice, how I cunningly qualified the percentage with “acknowledged.”)

Excuse me!

Sellers who are 12.3 percent off on the listing price of a property will find themselves condemning themselves to an eternal wait for their objective to be reached, like some god in Greek mythology, for a buyer to make an acceptale offer.  Even a price that is 8.5 percent too high almost invariably proves to be a mistake, except at the highest end.

To its credit, Zillow offers the following disclaimer:

Zestimates are a starting point in determining a home’s value; together with a home’s value range, comparable recent sales, and current listings, Zillow’s information helps consumers gain an edge in real estate and make more informed decisions.

I am, of course, biased against Zillow.  I don’t want sellers or, for that matter, buyers to make their own decisions without taking advantage of my expertise and experience.  And Zillow has taken plenty of heat — well deserved, I maintain — from the brokerage community for its Zestimates.

But, really, how can the site be proud of an error rate that could be so far from actual value.  It takes no account of a property’s condition, the distressed property next door or impending changes in the neighborhood, a sewage-treatment plant, for example.  The list of circumstances affecting value is a long one.

Still, lots of folks check the site, and I hope they understand the caveats.

All in all, I guess I have to laud Zillow for the progress it has made.  But consider my congratulations begrudging and far from hearty.

Subscribe by Email

Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
Web site

Advertisements

5 thoughts on “Zillow, please accept my tepid congratulations

  1. @Diane- Full disclosure: I advertise on Zillow. Now to my thoughts. I have shared this with Brad Andersohn and Sara Bonert as well- your disclosures, while transparent, are hard for the average guy to see. They see numbers and often think of them as coming from the Deity.

    There should be a way for the Zestimate to have a more overt disclaimer rather than having the consumer drill down the way they must to get local stats on accuracy. And that little popup still says nothing about contacting a real estate professional for a more personal estimate. That’s real chutzpah if you ask me. You won’t even recommend that consumers contact the very people who buy ads from you in your product disclaimer.

    As much as I like and admire Sara, Brad and the rest of the staff there, I wish you’d understand that things like this will always keep Zillow at odds with the very people you are trying to sell to-agents and brokers.

    Like

  2. So a CMA is more accurate than a Zestimate and an appraisal done by a professional is more accurate than a CMA and a Zestimate? Does this mean that CMAs are worthless? or do they have their definite place in the scheme of things and do they still serve a valuable purpose for certain scenarios and with certain caveats(ie just like a Zestimate)?

    If we got 10 CMAs from 10 different local agents on a particular home, how many “estimates” do you think would match? Certainly there would be some degree of variation amongst those estimates — and this would be even after the agents actually saw the house, neighborhood, etc! And then, if you compared those CMAs to the ultimate selling price, how many do you think would match? and what do you think the average error would be?

    Exactly. It really isn’t all that different from a Zestimate, is it? Well, except that it’s a whole lot more work to go through as a homeowner/seller/buyer.

    Don’t get me wrong — I think CMAs by a qualified, local, knowledgeable agent or broker is the way to go until you have to pay for a full appraisal. But to discount the value of a Zestimate when it’s inherent limitations are really quite similar to what you’d see with CMAs is a bit short-sighted and disingenuous, IMHO.

    Thanks for the forum!
    Carl

    Like

  3. Hi Malcolm: We are very transparent about the Zestimate’s accuracy and as you indicated, we strongly insist this is only a starting point and one piece of data for buyers, sellers and owners. If you read our FAQ about the Zestimate, we also suggest using professionals to get a better idea of the home’s value. here is the excerpt:

    “The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. Variations in price also occur because of negotiating factors, closing costs, and timing of closing. We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:

    * Getting a Comparative Market Analysis (CMA) from a real estate agent

    * Getting an appraisal from a professional appraiser

    * Visiting the house (whenever possible)”
    You can read more here: http://www.zillow.com/wikipages/What-is-a-Zestimate/

    Thanks for your post,
    Best,
    Diane Tuman
    Editor-in-Chief
    Zillow

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s