online.wsj.com — In the year since its launch, Zillow Inc. has made millions of Americans familiar with computer-generated estimates of home values, created a new online addiction and, become a staple of dinner-party chatter. But just how accurate is it? A Wall Street Journal analysis of 1,000 recent home sales shows some interesting results.
Feb 14, 2007 View in Crawl 4
hobbersFeb 15, 2007
dvfreelancer,You call yourself an investor, yet you think a $5k swing on a $100k is "HUGE". I think I smell something funny here ...If you really are as you say, you would know that houses have no exact value. It's not like going to the store and seeing a product for $9.99 and saying "yep, that's the right price". You aren't going to have a house appraised, have one guy say it's worth $100k and another guy say it's worth $101k, and call one of them a liar.You would also know that true appraisals (not influenced by an offer price) can easy swing +/-10% of the "real" value. That house supposedly worth $100k could easily have 3 appraisals come in at $90k, $100k, and $110k. Appraising is the only method owners have of "officially" determining the value of their home. But if you've ever seen an appraiser work, you know it is an extremely subjective field.Also, you would know that the sale price of a home depends heavily on the terms of the offer. A house listed at $100k could have 3 offers come in:1) $90k, all cash, no inspection, close in 21 days.2) $100k, 50% down / 50% conventional financing, close in 30 days.3) $110k, 100% conventional financing, close in 45 days.And the owners might be more inclined to accept offer 1 over offer 2, and offer 2 over offer 3. Offer 3 might be made by someone that has a preapproval letter, but in reality has no chance of getting that particular loan on that particular house. Offer 2 might be made by someone that can follow through, but has a 50% chance of being delayed or falling through. Offer 1 is cash in the seller's pocket.If you really do "buy and sell more houses in a year than most of you will in your life" then I would be interested to hear what part of the country you work in and how business is going there. Please don't take this response the wrong way, but as you probably know (if you are in the business) there are a lot of sharks and snakes out there in this business.I do agree with you about the corrupt appraisals though. They are all over the place and have screwed me before.
davidgibbonsFeb 15, 2007
Hi Mason, it's David from Zillow -- where do you live? In some areas, we don't have enough data to calculate a Zestimate and in those case we just display the tax assessment (with "Zestimate: None Available"). It sounds like that may be what's happening here.
Closed AccountFeb 15, 2007
@elebrio,I agree that their estimates still need improvement, but remember, Zillow is still in beta. As you can see in the comments below, davidgibbons from Zillow has joined Digg. If you have any suggestions about how Zillow can go about gathering more accurate and up-to-date information, or how they might be able to improve their algorithms, I'm sure he would be interested in hearing from you.
davidgibbonsFeb 15, 2007
1389 - Another GREAT point. One of the calculations run by the Zestimate algorithm does already work this way. Other formulae then try to produce valuations from some of the rest of our data -- and then the algorithm mashes up the best of those to produce the Zestimate.
Closed AccountFeb 15, 2007
@davidgibbons,For the sake of credibility and accuracy, it is my opinion that Zillow would be well advised to go ahead and put in the logic to recalculate the Zestimate based on the updated information submitted by the property owner. It's also important to take into account how this corrected information will affect the Zestimates for other nearby properties.BTW, I noticed that the article mentioned that Zillow will be getting information from MLS sources in Texas, because sale information is not available from the county. Would it be possible to obtain MLS information for properties in other states as well, because this would presumably be updated sooner than the county data?
speedoburritoFeb 15, 2007
This could be Texas, Oklahoma, any home in that region. OR there are "historic" homes, ones that are over 100 years old that have less than what we would expect in modern conveniences that sell for similar prices.
hharderJun 6, 2007
I live in 96768 and there are a number of houses that have sold for only"1000" dollars in the neighborhood and I am wondering if this has anything to do with the values being low on zillow for my area? Are low figures thrown out for the averages, or is zillow just going off of tax assesment value?
noonietunesJun 3, 2008
Wells Fargo is going by Zillow estimates when they discuss refinancing with customers. The licensed appraiser said my house was worth 650k last year, 715k now, based on the comps in the same and comparable neighborhoods within a mile. My realtor concurred that while 715 may be a high estimate, our area did not decrease in value. Wells Fargo says zillow says 509k. Now they won't even discuss refinancing with us. When it is pointed out to them that zillow does not take neighborhood into account, they just repeat the mantra: "San Diego is a depressed housing market." This is not true in our neighborhood. The Wells Fargo mortgage dept. see a large number of old houses down the hill from our neighborhood, selling for 400- 500k, regardless that these are 800 sq. ft. smaller, 15 years older, half size lots in a much older neighborhood. Many of those houses don't even have garages! Rest assured I will go with a mortgage broker and kick wells fargo to the curb, but zillow is screwing over a lot of people.