Monday, February 14, 2011

Taking on Zillow, Part 2

I've posted here earlier about Zillow and how they present misinformation to home buyers and sellers.

This morning I was reading a real estate news article about the market nationally, and they quote Zillow as an "expert source".  So I started wondering, where exactly do they get their data?

According to Zillow:  "Our data on and appreciation for these reports is based on the Zillow Home Value Index - a valuation index calculated as the median value (Zestimate) of all homes in a particular geographic area. At the national level, this data is then weighted according to population in each area".  That's interesting, since real estate is decidedly a factor of local economics and geographic specifics such as beaches and climate.  Ponder why, if Zillow's methodology is correct, Port Charlotte and Sarasota don't have the same housing prices, since we are geographically similar.

In fact, Zillow contradicts themselves as you dig further into the FAQ section of their website:  "The Zestimate is not an appraisal and you won't be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow.com does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home".  Correct.  Zillow does not have licensed Realtors or local contacts in any major real estate, other than the Realtors who mistakenly support Zillow by advertising on their site.

Digging even deeper, Zillow posts the accuracy of their "Zestimates" for all Florida Counties.  In Sarasota County, only 21% of their Zestimates were within 5% of the actual sales price, and only 64% of their Zestimates were within 20% of the sales price.

Bottom line:  Buyers, don't bother with Zillow.  The data is inaccurate.  They even admit they don't offer their information as a basis for you to purchase a property.  Sellers, if you are looking to sell, an agent such as myself who is prepared to counter a buyer armed with incorrect Zillow data will result in a quicker sale at realistic market prices.

3 comments:

  1. Hey David - Sara from Zillow here. Glad you found and pointed out all of the disclaimers, we try to be as transparent as possible about our data.

    Zestimates are just meant to be a starting point. As place where someone can go if they are looking to free, anonymous information. If they are serious about buying or selling, they should most definitely work with a local real estate agent who can create a customized plan for them.

    I like to relate it to WebMd. If you have a stomach ache or something, this is a site you go to as a starting point or an attempt to 'self diagnose'. But you can prescribe medicine or do an exact diagnoses of yourself. When you get serious about doing something about your ailment, you go to a professional. There you get the customized and accurate help you need.

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  2. Hi David - while Zillow is transparent about the accuracy of their data and zestimate information, you may be missing some of the other very valuable tools and information consumers (buyers and sellers) are accessing and using on the site.

    The zestimate is only a starting point and we do rely on local agents who are willing and able to work with our visitors and subscribers. I like the WebMD analogy... it is another great starting point and site for health information but I'd recommend an expert before surgery there as well.

    Looking beyond the zestimates, have you seen the other tools and services on Zillow? 15.7 million users toured last month, I'd be happy to give you a personalized tour if you're interested. Thanks.

    Brad :-)

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  3. Brad:

    No, thank you.

    While your "transparency" is laudable, you as well as I know that most people do not read the fine print. I spend a fair amount of time combatting inaccurate data from Zillow as a local agent in the real world, and real estate consumers as well as other Realtors should be aware of how you use your information.

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