You’ve probably heard about the real estate site zillow.com. If you haven’t, it aggregates a bunch of data like recent sales activity, taxes, homeowner input, and new listings to generate a “zestimate” for a particular house or neighborhood. It gives you a satellite image of any address you enter, and allows you to easily scan the area. I find it to be a nice tool if you’re looking for a new home, curious about your existing home’s value, or want to know what your neighbor paid for their house. The image illustrates my house's estimated value (dark blue) compared my zip code's values.
But how accurate is it?
When I first looked up my house in Zillow before I bought it, it was estimated to be right around the actual price I bought it for. The thing is, Zillow had no way of knowing that it was a fixer-upper, so it really should have been priced slightly higher I think. After I bought the house, I claimed ownership of it by creating a Zillow account. This allows you to customize your home’s profile by adding or deleting amenities, which affect the value. The estimate it is giving me right now seems pretty accurate, but I was honest in the profile I created. I could have said the house has five fireplaces and a finished basement, and the value would have gone up accordingly. I just looked at the zestimate of a house around the corner from me that came out at $485,000. A few months ago it actually sold for $285,000! The house looks like it needs some work, but $285 really sounds like the new buyer got a great deal, so I don’t blame Zillow for the estimate being higher than the closing price, but it should not have been that high, either.
So take the zestimates only as a guide, as there might be some homeowners out there who are inflating their home’s value or the software might not be as accurate as we’d all like. Zillow has a nice page that rates the accuracy of their estimates compared to actual sales in different areas of the country: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm. My area gets only two out of four stars, so that’s another indication that this is a nice tool for initial research, but not for major decision-making.
But how accurate is it?
When I first looked up my house in Zillow before I bought it, it was estimated to be right around the actual price I bought it for. The thing is, Zillow had no way of knowing that it was a fixer-upper, so it really should have been priced slightly higher I think. After I bought the house, I claimed ownership of it by creating a Zillow account. This allows you to customize your home’s profile by adding or deleting amenities, which affect the value. The estimate it is giving me right now seems pretty accurate, but I was honest in the profile I created. I could have said the house has five fireplaces and a finished basement, and the value would have gone up accordingly. I just looked at the zestimate of a house around the corner from me that came out at $485,000. A few months ago it actually sold for $285,000! The house looks like it needs some work, but $285 really sounds like the new buyer got a great deal, so I don’t blame Zillow for the estimate being higher than the closing price, but it should not have been that high, either.
So take the zestimates only as a guide, as there might be some homeowners out there who are inflating their home’s value or the software might not be as accurate as we’d all like. Zillow has a nice page that rates the accuracy of their estimates compared to actual sales in different areas of the country: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm. My area gets only two out of four stars, so that’s another indication that this is a nice tool for initial research, but not for major decision-making.
1 comments:
The one for our area seems pretty right on, I have to say... sadly, too, I might add. Ah, well.
Sometimes I don't know where they get their data... such as the data that the house next door sold for $296K, when it was not for sale (and wasn't sold), and is worth about $140K, just like mine (identical, in fact).
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