I think Zillow is great for getting a ballpark estimate of your home’s value… but that’s it.
They certainly are not accurate enough to determine a list price for your home.
Admirably, Zillow actually tells you how accurate/inaccurate their estimates, called Zestimates, are.
Zillow can look at their Zestimates and then at what the homes actual sold for to determine the error.
For the Phoenix-Mesa, AZ metropolitan statistical area;
- 36% of Zestimates were within 5% of the actual sale price
- 61% of Zestimates were within 10% of the actual sale price
- 84% of Zestimates were within 20% of the actual sale price
- Overall, Zestimates had a median error of 7.5%
Let’s say this another way.
- 16% of Zestimates were off by over 20%! Double Yikes!
- 39% of Zestimates were off by over 10%
- 64% of Zestimates were off by over 5%
- Zestimates were normally off by 7.5%
Zestimates are fine as long as you know how accurate/inaccurate they are.
Declining Accuracy
By the way, Zillow used to say that in metro Phoenix 28% of Zestimates were off by over 10%. Now they say 39% of Zestimates are off by over 10%. I appreciate their honesty.
As long as you know.
Forewarned is forearmed.
6 responses so far ↓
1 AZ Short Sales // Jan 10, 2008 at 2:23 pm
Yup- exactly right. This is why I discourage anyone mentioning that site, or any others like it, from using it to find their home’s value. It’s a bunch of fluff and crap. I can’t believe they’re got funding for it- it’s like the dot com boom all over again. Let’s hype up a dot com, even tho it doesn’t work worth a dime, and then try to sell it for billions of dollars, and let the next guy take the fall. Amazing that it’s lasted this long.
2 dan // Jan 10, 2008 at 4:36 pm
John, what do you make of the latest inventory numbers. Down big in AZ, and down general throughout the nation.
3 John Wake - Real Estate // Jan 10, 2008 at 5:38 pm
It’s seasonal. They are down a lot less in Arizona then last year at this time.
I thought for a couple of months a year ago that the falling inventory meant the correction was over. Boy, was I wrong.
Here’s a recent post. http://www.arizonarealestatenotebook.com/2007/12/20/arizona-real-estate-market-at-a-glance-updated-with-november-2007-data/
“The inventory of homes listed for sale (red line) in December fell from November. The decline, as you can see in the graph, is later and smaller than in 2006 which suggests that there is still upward pressure on inventory. “
4 Brian McMorris // Jan 10, 2008 at 9:00 pm
John, what do you think about the CFC news this afternoon?! It is in negotiations to be bought out by Bank of America. Citi is also in discussions with an foreign investor for a big cash infusion that should secure its future (prior to Q4 earnings on Tuesday) and Washington Mutual put itself on the auction block. Could this be the turning point for the financials? It would still be many months before all the problems begin to clear, but this is a positive.
5 John Wake - Real Estate // Jan 10, 2008 at 10:57 pm
CFC seems like a bargain. What was it today? $5 a share?
The cost of money to borrowers is very expensive now. I think it would be be good time to own a lean a mean mortgage company… but I don’t know much about that industry.
I’m very concerned about Freddie and Fannie adding more cost to “Alt-A” loans soon. If your credit score is under about 680, you have to pay a lot extra in interest.
Borrowers a starting to get squeezed. If you are only going to lend money be people with great credit, it seems like there will be some real money to be made. Of course there is the downside risk on real estate prices but most of that will be out of the system a year from now… I think.
6 MPS // Jan 15, 2008 at 2:13 pm
I doubt that the real estate market will bounce back by the next year. The Fed lowering the rates again will just make it a slow and agonizing decent into reality. Next, job losses and a wave of BKs. Hold on tight folks because we are in for some rough years.
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