by Jim the Realtor | Sep 12, 2024 | Market Conditions, Why You Should List With Jim, Zillow |
Borrowing this from Rob’s blog, this is known as Amara’s Law in technology spheres.
It goes:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
When the zestimates first came out in 2006, their accuracy was really bad – wrong by 10% to 20% – and those of us in the business laughed them off as a joke. The idea of being able to find out the value of a home with one click was inticing though, so Zillow kept throwing millions of dollars into the project.
They found out that putting a value on a home isn’t so easy, and they still state today that their zestimates have a median error rate of 7.49% – which on a $3 million home is +/- $224,700!
From wiki:
While factors contributing to estimates are described elsewhere, Zillow seemingly overemphasizes home square footage as the major metric driving property valuation. This method may not be unique to Zillow, but unduly distorts value expectations. Listings in areas where land is priced at high premiums often reflect an identical Zillow estimate to that of nearby homes with comparable interior square footage, but where the home might be decades older. Condition, age of home, special features, and proximity to nuisances are insufficiently factored into the estimate. Zillow has made some effort to add balance by including an option for owners to provide their own value estimate, but these figures can be similarly unreliable as being opinion instead of quantifiable.
But homeowners have come to adore their zestimate.
Why? Because it’s been around so long, they believe it to be true.
I had a potential seller tell me last week that their zestimate was how much she could sell her house for. Not that it was the approximate value within +/-7% of being correct, and just a starting point. She believed it was going to be her sales price!
It wasn’t a problem during the frenzy because in the 2020-2022 period you could put any price on a home and it would sell. The homeowners were pleasantly surprised at the extra bonus above their zestimate, and didn’t complain.
But it is different now.
I’ve heard it twice in the last week from two different agents that their price is “right in there”, suggesting that they have evidence of their price being right and just get my buyer to pay it. But there they sit, unsold.
Having a zestimate, or having cherry-picked comps to support today’s list price is precarious – it ignores the current market conditions, which are squishy to say the least. The premium, fixed-up, and staged homes are selling briskly, and the others are sitting.
But because the zestimate has been around so long, people believe it must be right. Sellers certainly don’t want to take less! Include 1-2 older sales and sellers and listing agents want to believe the mythical nuclear buyers with 2.2 kids are right around the corner.
Get Good Help!
by Jim the Realtor | Sep 2, 2024 | Forecasts, Zillow
Since May, Zillow has been predicting virtually no annual appreciation locally. Living in Flat City mostly affects those who have purchased recently – it’s tougher to move and/or refinance if the down payment was 20% or less. If you just want to lower your existing rate, ask your lender about a streamline refinance. Those don’t require an appraisal.
Carlsbad NW 92008
Carlsbad SE – 92009
Carlsbad NE – 92010
Carlsbad SW – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Rancho Santa Fe – 92067
by Jim the Realtor | Aug 7, 2024 | Forecasts, Zillow
Living in Flat City can be a disaster for those recent purchasers who buy the wrong house, or get divorced. If you have to resell your home in a year or two after buying it, the down payment will get eaten up and you may not be able to buy another house….unless you leave town.
NW Carlsbad – 92008
SE Carlsbad – 92009
NE Carlsbad – 92010
SW Carlsbad – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Rancho Santa Fe – 92067
by Jim the Realtor | Jul 20, 2024 | 2024, Sales and Price Check, Zillow
San Diego’s YoY gain of 9.4% is third highest behind San Jose and Hartford, and our +55.4% since March, 2020 is #1 among the higher-end markets!
by Jim the Realtor | Jun 27, 2024 | Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim, Zillow |
How about those zestimates?
We see on every listing in America that once a home hits the MLS, Zillow revises their zestimate to within a couple of dollars of the list price. That alone is shady and should be illegal, given how consumers have come to rely on them as the truth.
How close are they when homes are off-market?
The pre-market zestimates on our recent listings range from being as much as $550,400 UNDER the actual sales price, to being $815,000 OVER the sales price.
The scariest part is that sometimes they are close to being right!
Which is which? How do you know how accurate your zestimate is?
We should stop saying that commissions are negotiable and say it correctly. Every agent has their own commission rate – some agents charge more, and some charge less, and it usually depends on their skill set.
Are you going to hire a less-experienced agent who isn’t as good on pricing, just to save a point because you trust your zestimate? Yikes!
Get Good Help!
Sold for $1,870,000. Wrong by $296,900.
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Sold for $2,705,000. Wrong by $94,200.
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Sold for $4,137,000. Wrong by $815,000.
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Sold for $926,000. Wrong by $57,300.
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Sold for $1,400,000. Wrong by $114,000.
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Sold for $1,610,000. Wrong by $197,200.
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Sold for $3,365,000. Wrong by $550,400.
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Sold for $1,350,000. Wrong by $105,000.
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Sold for $1,450,000. Wrong by $281,500.
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Sold for $2,440,000. Wrong by $16,100.
by Jim the Realtor | Jun 18, 2024 | Zillow
Zillow sent me two more areas:
Encinitas, 92024
Rancho Santa Fe, 92067
We are rolling into Flatline City, and we’ll be here the rest of the year. At least.
Expect that the 1Q25 market will be the best of that year too, just like in 2024.
by Jim the Realtor | Jun 13, 2024 | Zillow |
Here is the first report in the next cycle of local Zillow forecasts.
At the beginning of the year, they predicted that all of the local areas would appreciate 3% to 4%, and by March they raised their optimism into the 5% range.
All of those gains must have already happened?
They think that values will go negative from June to May, apparently.
These look like they will flatten out too:
It’s Friday – here is their next offering:
by Jim the Realtor | May 23, 2024 | 2024, Carlsbad, Carmel Valley, Encinitas, Forecasts, Zillow
Zillow has every reason to be the nation’s real estate cheerleader since they derive the bulk of their income from realtors. They had been predicting 3% to 6% appreciation locally this year….at least up until two weeks ago.
Something has changed:
Carlsbad NW – 92008
Carlsbad SE – 92009
Carlsbad NE – 92010
Carlsbad SW – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Carmel Valley out in front with a +2% over the next year? Yikes!
It means they think that everywhere else will be flat, at best.
by Jim the Realtor | May 1, 2024 | Commission Lawsuit, Realtor, The Future, Zillow |
Test drive an agent free for seven days!
Now that NAR’s proposed settlement of the Sitzer/Burnett lawsuit has received preliminary approval, the industry is receiving numerous updates about the future of real estate practices.
One change, set to take place in July, is that home buyers will be required to have written agreements with real estate agents before touring properties.
Although Zillow is not required to offer consumer-facing agreements, it recognizes that this step can foster transparency, open communication and better alignment between agents and clients. It also understands that buyers may hesitate when it comes to signing a long-term contract with an agent they don’t know.
To help solve this problem, Zillow is offering a non-exclusive touring agreement for agents to use.
In the announcement, Errol Samuelson, Chief Industry Development Officer stated, “…insisting that a buyer sign an exclusive, long-term agreement with an agent, perhaps before even meeting the agent, feels premature. That’s why Zillow has created a non-exclusive touring agreement, and we’re making it available for use to the entire residential real estate industry.”
With this agreement, neither exclusivity nor compensation is required. Zillow suggests negotiating these aspects after the initial meetings when both the home buyer and real estate agent are comfortable moving forward.
“At the time when an additional agreement is signed, the buyer and the agent should be aligned on all terms and expectations, including compensation, with no surprises,” Samuelson said in Zillow’s post.
While this agreement benefits buyers who are not ready to fully commit to an agent before touring a property, Zillow also emphasized the value agents bring to transactions, noting that agents help ease the complexity and stress involved in buying a home.
Zillow is encouraging agents to embrace transparency and prioritize building trust with clients, and the group is offering its touring agreement to all agents.
“As we move forward, it’s important to remain focused on who the real estate industry serves: buyers and sellers,” Samuelson stated. “In this moment of evolution we’re extending an invitation: join us in putting consumers first.”
Touring-Agreement-zCopyrighted-vr041124
From Zillow:
“Buying a home is complex and often comes with a lot of stress: half of buyers tell us they cried at some point during the process. Without an expert prioritizing their individual needs, buyers can miss out on making a competitive offer, leave money on the table in the negotiation, ignore potential pitfalls or waive important aspects such as inspections – which can end up costing them later. Most buyers want and need an expert on their side – we don’t see that changing. This makes finding the right agent that much more important and it’s why upfront conversations about expectations and compensation are critical. We strongly believe in the value of independent representation: buyers and sellers deserve to work with an agent who is committed to their best interests and only represents them.”
by Jim the Realtor | Apr 26, 2024 | Zillow |
In February, their annual appreciation guesses were in the 3% to 4% range. In March, they got excited and bumped all local areas up to 4.9% to 6.3%! They are back to the 2.2%-3.9% range, with Carmel Valley clocking in with a solid 4.3% over the next 12 months.
It probably means that pricing will be fairly flat until next year:
Carlsbad NW
Carlsbad SE
Carlsbad NE
Carlsbad SW
Carmel Valley
Del Mar
Encinitas
La Jolla
Rancho Santa Fe
