Zillow's "Zestimate" Is Not What You Think
Promoted as “the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge,” Zillow has rapidly become a go-to source for buyers and sellers alike. Zillow does an amazing job displaying photos of homes for sale with the ease of a simple search. Regrettably, the real estate data provided by Zillow is notoriously inaccurate and inconsistent.
What many consumers don’t realize, however, is that Zillow is first and foremost a lead generation tool for real estate professionals. Under the perception that they are “invisible,” buyers and sellers eagerly surf through “Zestimates,” while at the same time Zillow is capturing whatever data is entered during these searches and selling it to local REALTORS®.
When a property is listed for sale, the data hits the local Multiple Listing Service (MLS), in a matter of minutes. But, it can take as long as nine days to populate on nationally syndicated sites like Zillow or Trulia. A study by Redfin found that brokerage-sourced listings displayed 100% of the MLS homes listed for sale, but Trulia displayed only 81%, and Zillow just 79%.
In fact, when questioned about the reliability and accuracy of information available, the CEO of Zillow, Spencer Rascoff, made a statement last year that “while Zestimates are a good starting point, nationwide Zestimates have a “median error rate” of about 8%.”
So, on a $500,000 home, that disparity would be $40,000… a significant gap. Furthermore, the localized median error rates regularly exceed the national median.
National syndicators like Zillow, gather information not only from MLS systems but also from third-party sites, meaning they can host information that has been posted by anyone, regardless of authenticity. Furthermore, national syndicators don’t have the same extensive and strict standards required by the MLS, so the information tends to be very misleading with virtually no accountability. And interestingly, similar to data found on Wikipedia, the public has the opportunity to make updates to Zestimates, adding another level of fallibility to the information.
Colorado Springs real estate can change from month to month, and specifically from neighborhood to neighborhood. Many factors are taken into consideration when assessing value, such as the location, condition, and improvements in a home. It is simply not reasonable for an algorithm like Zillow’s, to quantify the value of a kitchen that was just remodeled or a yard that is poorly maintained, among other variables.
For perspective, I looked at 15 random sales in Colorado Springs and 100-percent of Zillow’s values were inaccurate. In one case, a home that recently sold for $575,000, had a Zestimate of $322,960. That’s a difference of $252,040 – or 56%! Another recent example is a home listed in Colorado Springs for $3,200,000. The Zestimate assigned to this home was $1,800,000 – a substantial difference.
As the CEO of Zillow has indicated, the data provided on Zillow is a good starting point. PERIOD. It is a great place to look at photos of homes. But if you are interested in knowing “true real estate value” of your home; or if you are looking for real-time information in our highly competitive real estate market, I encourage you to contact a local real estate expert.
Anyone looking for an accurate assessment of their home’s worth should give me a call. Whether you choose to buy or sell with me, I am always happy to give you a realistic value for your home at no cost you.
Mike@BuyWithMike.com
This article was first published by Mike MacGuire on Springs Houses: http://springshouses.com/homepage_content/zillows-zestimate-is-not-what-you-think/
What many consumers don’t realize, however, is that Zillow is first and foremost a lead generation tool for real estate professionals. Under the perception that they are “invisible,” buyers and sellers eagerly surf through “Zestimates,” while at the same time Zillow is capturing whatever data is entered during these searches and selling it to local REALTORS®.
In fact, when questioned about the reliability and accuracy of information available, the CEO of Zillow, Spencer Rascoff, made a statement last year that “while Zestimates are a good starting point, nationwide Zestimates have a “median error rate” of about 8%.”
So, on a $500,000 home, that disparity would be $40,000… a significant gap. Furthermore, the localized median error rates regularly exceed the national median.
National syndicators like Zillow, gather information not only from MLS systems but also from third-party sites, meaning they can host information that has been posted by anyone, regardless of authenticity. Furthermore, national syndicators don’t have the same extensive and strict standards required by the MLS, so the information tends to be very misleading with virtually no accountability. And interestingly, similar to data found on Wikipedia, the public has the opportunity to make updates to Zestimates, adding another level of fallibility to the information.
For perspective, I looked at 15 random sales in Colorado Springs and 100-percent of Zillow’s values were inaccurate. In one case, a home that recently sold for $575,000, had a Zestimate of $322,960. That’s a difference of $252,040 – or 56%! Another recent example is a home listed in Colorado Springs for $3,200,000. The Zestimate assigned to this home was $1,800,000 – a substantial difference.
As the CEO of Zillow has indicated, the data provided on Zillow is a good starting point. PERIOD. It is a great place to look at photos of homes. But if you are interested in knowing “true real estate value” of your home; or if you are looking for real-time information in our highly competitive real estate market, I encourage you to contact a local real estate expert.
Anyone looking for an accurate assessment of their home’s worth should give me a call. Whether you choose to buy or sell with me, I am always happy to give you a realistic value for your home at no cost you.
Mike MacGuire
Colorado Springs Real Estate Agent
The MacGuire Team
6760 Corporate Dr
Ste 300
Colorado Springs, CO 80919
719-536-4324 or 719-660-6793
Mike@BuyWithMike.com
This article was first published by Mike MacGuire on Springs Houses: http://springshouses.com/homepage_content/zillows-zestimate-is-not-what-you-think/
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