Anybody can evaluate a tract home with accuracy – the custom homes are much tougher, and depend more on personal visits. If you are in a custom area, hit the open houses (sellers and buyers)!
An excerpt from USAToday.com:
http://www.usatoday.com/story/tech/2014/09/01/zillow-trulia-spencer-rascoff-q-and-a/14703979/
Zillow employs a team of economists who contribute to the Zillow Real Estate blog and release market data that competes with similar research from Case Shiller and others.
The company makes no money off the data but does it for audience growth. “We have a $10-million-a-year expense item for all this,” Rascoff says. “It goes much beyond PR,” he says. “This is data analytics.”
For Zillow users, the company’s trademark “Zestimate” is a way to gauge how much a home is worth. The company produces 110 million Zestimates three times a week, Rascoff says.
The margin for error can vary a lot by region and locale. In San Francisco, “we give ourselves two stars, which is not very good.”
In San Diego, “we give ourselves four stars.”
The wide range has to do with lots of different things, he says, including the quality of underlying data from county records and the like. And the data tends to be less accurate on the high and low ends of the market, because there are fewer comparison homes, or comps.
Still, he says, it’s a pretty good starting point, “considering that we have never been in the home.”
After all, he says, “we call it a Zestimate, not a Zappraisal.”
http://www.usatoday.com/story/tech/2014/09/01/zillow-trulia-spencer-rascoff-q-and-a/14703979/
There is something fishy about Zestimates. I’ve been watching the estimate on my house because I’m planning to sell it (sorry it is not in NSDCC), and during the weekend it was around $515K, but tonight it dropped to $494.5K, which is fine, except Zillow shows the 30 day change as -$2.8K, as if the $515K estimate that Zillow was showing on their website over the weekend never existed. And it is not like the $515K was an aberration, the Zestimate had been sitting at that level for two months! I supposed most people won’t notice the retroactive editing of Zestimates, but for those who pay attention to details it really undermines their credibility.
Sorry for the two comments, I forgot to add, my house is a tract house in a development with ~270 similar houses. It should be one of the easy ones to estimate.
Thanks Jeremy, and if Zillow is the industry leader, they better be accurate. Their credibility is easily suspect just because they are newcomers and built their whole platform on trust.
You nailed it, tract home they have it within reason. Elsewhere, not a chance.
A house can literally close at a retail price, say $450k and Zillow still cannot get a grasp on its value.
It’s a flawed algorithm and in an area with such massive swings due to location, quality of build style and condition it just cannot keep up.
Homeowners will be first to quote it when its high, and the first to ignore it when its low. I would too though, can’t blame em.