Bay Realty Blog: Why Zillow Estimates are Wrong

Why Zillow Estimates are Wrong

Lise Howe has really explained the basics of why Zillow is not correct in valuing a home. Zestimates are not close to correct in Alaska. Alaska is a privacy state so no sales price is published Zillow is really throwing darts in the dark for our valuations!

You want to know how much your home is worth, so what do you do? If you are like many buyers and sellers around the country, you go to Zillow to get a valuation of your home. But how does Zillow actually work?  Is it accurate? Can you rely on it? Should you rely on it? 

 

Sites like Zillow utilize an automated valuation model (AVM) to determine the worth of a property. Automated valuation models rely on basic property characteristics like the number of bedrooms and baths,  square footage, publicly available data, price trends and local market information to arrive at an estimated value for a property.  The name AVM says it all - it is an automated model.  It does not allow for variables that will give you an accurate valuation. 

 

Zillow works on the averaging principle. Using a complex proprietary math equation Zillow analyzes numbers from past sales (comps) to estimate your home's worth.  Simply stated, Zillow values your home without ever seeing it.  Obviously a valuation without seeing your home is going to be only an estimate.  Even Zillow CEO Spencer Rascoff said that the Zillow estimates are only a starting point with an 8% median rate of error.

Why isn’t Zillow Accurate? There are several reasons for this.

Zillow does not have a way of evaluating property condition and capital improvements. Zillow doesn’t know if I still have the pink shag carpet from my childhood or the new Brazilian cherry hardwood floors I put in last year in my basement. It doesn't know anything about my home except square footage and the number of bedrooms. Even if my home is surrounded by homes that have a similar square footage, do I really think my Zestimate is going to be accurate if it can’t take into account property condition?  

Zillow doesn't have a way of evaluating the location of a particular home within the community.  You know that a home under a high voltage transmission line is going to have a different value than one in the same community on a quiet cul de sac out of sight of that power line.  A home near the playground of the local elementary school will likely have a different value than one backing to a high school parking lot.  

Zillow doesn’t distinguish between colonials and ramblers, condos and single families.  A valuation model limited to bedrooms and square footage won’t distinguish between architectural styles but everyone will agree that there is a difference in consumer preference between colonials and ramblers or condos and single families that will affect value.

Zillow doesn’t distinguish between types of sales. A property sold between family members may well have a different price than the same home sold on the open market.  Similarly a property sold as a short sale or after a foreclosure will be valued differently by consumers – but not by Zillow.  But you know very well that your neighbor’s short sale did not bring the same price that you should receive for your home. 

As a local Realtor with 28 years experience, I understand those differences.  If you are interested in finding out the real value of your home, please call me at 240-401-5577 for a complementary, no obligation analysis that considers all the relevant variables or email me at lise@lisehowe.com! Don't guess! Find out! 

If you are looking for a home in the DC metro area, you know there is more to the process than just picking a property and making an offer. You need to find the best location for your wants and needs, get a great price, and work with a lender who will make your life easier - not harder.  Trust your search with a Realtor who is licensed in DC, MD and VA and really knows the city and all its secret neighborhoods.

Start your search with the Lise Howe Group, Washington Natives who love the city and all its quirkiness! If you are moving or relocating to Washington DC, be sure to ask for our relocation guide. Call us at 240-401-5577 to schedule an appointment or email us at lise@lisehowe.com.  Too excited to wait to talk to us about a great home? Just click here to start that home search.

If you want to see what is for sale in Washington DC, Chevy Chase and Bethesda, check out these links below:

Bethesda Condos for Sale

Chevy Chase Condos for Sale

Bethesda Single Family Luxury Homes

 

Chevy Chase Single Family Luxury Homes

Luxury Single Family Washington DC Homes

Washington DC Single Family Homes Under $1 Million

 

Washington DC Condos

 

Lise Howe
Keller Williams Capital Properties
240-401-5577 (24 hour direct)
Licensed in DC, MD, and VA
Associate Broker, GRI, ABR, CRS
The Lise Howe Group
Howe Real Estate Should Be!
www.lisehowegroup.com

www.bethesdahomesforsale.com

www.kenwood-forest.com

www.thelisehowegroup.com

www.homesinchevychasebethesda.com

 

 

       

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Comment balloon 3 commentsDebra Leisek • August 05 2016 10:26AM

Comments

Debra, a great re-blog I have been crusading against this for years, glad Lise is getting her blog post spread around the country, Endre

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) over 1 year ago

Yes Endre Barath, Jr. I thought she did such a good job of explaining in clear thoughts how zillow is so far off base! wish the general publice would listen!

Posted by Debra Leisek ( Bay Realty,Inc Homer Alaska) over 1 year ago

Good morning Debra Leisek,

Great choice of post to reblog. I missed it! We are also a privacy state so Zillow throws darts in TX in the dark for valuations too!

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) over 1 year ago

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