Monday, February 4, 2008

Zillow’s accuracy falls short

If you're an individual home buyer or home seller, and you're using Zillow to help estimate the value of a particular home, I have some advice: don't.

Zillow's accuracy of data would struggle to earn a passing grade in all but the most generous of schools. And Phoenix is listed as 4 Stars – their most accurate rating!

I'm looking at the results of 3 different types of Zillow-information:

1. Zillow's own Website claims: 36% of all zestimates are within 5% of the actual sales price; 61% are within 10% of the actual sales price; and 84% are within 20% of the actual sales price.

This means that a home with a zestimate of $300,000 should sell between $240,000 and $360,000 in 17 out of 20 cases. The other 3 cases would be lower than $240,000 or higher than $360,000.

If a client asked me how much he/she should pay for a house that comps out around $300,000, and my response was "somewhere between $240,000 and $360,000, but possibly less than $240,000 and maybe more than $360,000", I would fail as an agent.

Result: Fail.

2. Zillow's list of Active Properties: I had clients recently send me a list of homes they had found on Zillow that they wanted to see in person. All 15 were listed in Zillow as Active Listings, but up-to-date MLS records showed different information.

3 of the listings were already in escrow. 1 seller had canceled the listing (meaning it was no longer for sale). 2 of the listings had expired (meaning they were also no longer available for sale). And 9 listings were Active Listings.

Result: 9 out of 15 is 60%. D minus.

3. One Particular Example: I have a house under contract at $287,500. The list price was $323,900, and Zillow's zestimate was $363,125. So out of all the examples out there, the first one I pick to look at in more detail falls outside of the claimed 80% accuracy range.

Result: Fail.

Note: the numbers above were modified, but the relationship between them has been kept accurate.

What does this mean for somebody who wants to use Zillow? Go ahead and use it. Zillow's a nice way to get acquainted with a new city – it gives you the lay of the land and a general idea of what prices are for different areas. But for any particular home, I would run (not walk) to find a local Realtor who can help you find that home's true value.

Your prefers quality over quantity Realtor,

Chris Butterworth

[tags] zillow, zestimates, phoenix real estate, Fletcher Heights [/tags]