Zillow is a fairly popular website among buyers. They have an algorithm they use to provide a Zestimate for any house, whether it’s actively for sale or not. The Zestimate is Zillow’s estimate of what they think the house is worth. This Zestimate is derived from recent comparable sales and a little fairy dust, I think.
I spend a lot of time debunking Zillow Zestimates. I will admit, it kind of pisses me off. I have to provide a buyer with comparable sales for any house they’re interested in, which is perfectly fine and expected as part of my job. But then I also have to go through an additional analysis of why Zillow is wrong with their Zestimate and why the buyer shouldn’t put much stock in that value. It’s hard to do this because Zillow doesn’t really tell you how they get their numbers, and who knows how much fairy dust is worth and figures into the calculation.
My own house is a perfect example of just how wrong Zestimates can be. Zillow started hating on my house in August 2012 and hasn’t given me a break since. In the real world, my house is probably worth around $350,000 given the condition it’s in and updates that have been done. Let’s take a look at Zillow’s data and see what they say, shall we?
In July 2012, Zillow said my house was worth $314,000. Today it is worth $209,738. Well, they really give a range, so Zillow says it’s worth somewhere between $145,000 and $294,000.
Is this some kind of joke? They’re saying my house is worth less than what foreclosures sell for in my neighborhood. And how exactly do they even come up with the value they’re stating if it’s lower than the lowest of sales in my neighborhood? This makes no sense at all. When I look at the Nearby Similar Sales they tout, they are all within 200 square feet of the size of my house and the lowest sale price is $314,900.
So what exactly have we done to warrant a Zestimate of more than $100,000 less than the lowest comparable sale? I do not know.
Zillow also hates many other houses in my neighborhood, including a house I have listed right now for $395,000. Zillow thinks it’s worth $268,389. The house went under contract in a week and I can tell you that it’s not selling anywhere near $268,389. If it’s any consolation, Zillow does feel that the value of this house increased by $41,971 in the last 30 days. Maybe we should have had the owners list it even higher? How does a house value increase by 18% in just 30 days? The other bizarre thing about this house is that it is very similar to my home, but Zillow uses completely different Nearby Similar Sales for my house and this one, even though it is located only .35 miles (4 city blocks) from my house.
Do you see why I’m confused? Where do these garbage Zestimates come from? And why do I have to keep debunking them?
What has been your experience with Zillow? Do you think it grossly underprices or overprices your home in their Zestimate?