The highs and lows of using Zillow

| Monday, May 5th, 2014 | 1 Comment »

bulldozerI’m not going to lie; Zillow sometimes makes me cringe. It can either be my good friend or I want to pull its hair and make it cry. I love when it gives folks good news but only if that news is accurate. I hate it when it tries to argue with me. I am sometimes wrong, like when I watch Jeopardy or play Trivial Pursuit, but I’m an A+ student of real estate.

Zillow is based on an AVM (Automated Valuation Model). That, my friends, means there is no actual human behind the curtain. It’s a mathematical formula, an algorithm, and the actual definition makes my head hurt. It basically takes the specs of your house, mixes it with comparable sales, then muddles it with some other data and finally serves you a home price cocktail. Easy and quick and free. However, there’s a reason why most important things in life are not usually easy and quick and free.

If you have a home that backs up to a street of million dollar homes or a home that backs up to a street of apartment complexes, Zillow isn’t going to know. If you have a home with slab granite or a home with mauve tile, Zillow doesn’t have a clue. If you put in the effort to install beautiful hardwoods, new windows, a new furnace, a new hot water heater, cherry cabinets and upgraded your fixtures from gold to silver, don’t you want the price to reflect that? On the flip side, if you have a C+ house in an A+ neighborhood, Zillow might give your house too much credit. Or – like one of my clients! – if you bulldoze your house to the ground, Zillow may continue to send you “zestimates” of the old house’s value. Thanks, Zillow.

Let’s get back to that mathematical part. Zillow says that its median error rate is 6.9%, meaning that zestimates can be up to 6.9% higher or lower than the actual selling price. If 6.9% doesn’t seem like a big spread, consider this: for a $500,000 house, the zestimate can be between $465,500 and $534,500 – a difference of nearly $70,000! However, experienced agents like me get far closer, if not right on the money.

In other words, Zillow is kind of like reading the Cliff Notes. It gives you a little bit but not the whole story. If you are wondering what your house can sell for go ahead and check Zillow…but promise to call me after. Or, submit a Your Home’s Value request and I will email you your home’s current value in today’s market, not a random home price cocktail!

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One Comment

  1. Keith says:

    Cara,

    Super write up and right on the money! I have to say I am a little freaked out by the new “Zestimate Forecast.” I didn’t know they had a crystal ball!

    TTFN,
    Keith

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