WHEN YOU HAVE 941,000 OPINIONS AS TO THE VALUE OF YOUR HOME, WHICH ONE IS CORRECT?
If you use the term “House Values” in a Google search, you get 941,000 web pages in English that will tell you “how much your home is worth.” Most of these sites attempt to get your personal information and then sell this lead to a Real Estate Agent. However there are a few others sites like Zillow that use some magic formula to arrive at a value for your home. To its’ credit, Zillow, launched only a year ago, has made “Zestimate” — its’ trademarked value estimator, a household term. With all this hoopla, it is no wonder you, your neighbor or friend, and millions of others routinely “Zillow” their most important investment, ones personal residence.
But this growing popularity gives rise to the question recently raised in a Wall Street Journal article titled “How Good Are Zillow’s Estimates?” A WSJ analysis of 1,000 recent homes sales shows that Zillow’s “Zestimates” often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible – off the mark by more than 25% on one in 10 homes. In one case it was off by $2 million.
In an effort to test Zillow’s accuracy locally, I Zillowed three Yountville neighborhoods and compared their “Zestimates” to the sales data from BAREIS, my local MLS provider. I chose the homes on Vintner Court and Colombard Way, where I live, because these homes are all very similar: 3 BR, 2BA, single story, approximately 1,300 SF. Zillow’s “Zestimate” range was $582,000 to $761,000. Since Jan.1, 2006, only one home sold on 9/6/06 for $695,000 and was in need of total updating; and one is for sale for $815,000 which has been totally updated. In my opinion, the “Zestimates” in all but a few are approximately 10-15% under value. Next I analyzed Heritage Estates where the homes are uniformly upscale and very well kept. The Zillow estimates ranged from $787,000 to $1,230,000 with the average being $957,895. Again, I feel this is an underestimate of approximately 25%. Finally, I looked at Washington Park and found the same under valuing. It became clear Zillow doesn’t consider many essential components in arriving at its value, i.e. remodeling, up scaling, and especially premiums like vineyard views. Just imagine if someone used Zillow’s $788,000 “Zestimate” for 5 Lande Way, which is currently in escrow with a listing price of $1,475,000.
As a property owner, there is no doubt, we all look for shortcuts. Shortcuts to determining what our property is worth. Shortcuts to saving on real estate commissions. Shortcuts to lenders. But remember, just like tax accountants, savvy real estate agents are there to make sure you don’t leave any money on the table. Unlike the Turbo Tax box or the Zillow “Zestimate” that can’t answer questions or advise you on your personal situation or the uniqueness of your property.
Since 1977, I have lived and worked in Yountville and sold over 100 properties here. Believe me, if I don’t know what your home is worth living here 24/7, there is no hope for Zillow. And if you must check property values online, try http://www.realestateabc.com/. In my experience, it’s more accurate in giving you a true value.