In my opinion as a real estate agent, Zillow.com can be a helpful tool for consumers for ball-park property valuation but should not be relied upon to provide exact opinions of value. Read the small print on Zillow.com and they will tell you the same thing. Check out their FAQ page.
The reason zillow is unreliable for property valuation is that no algorithms or mathematical formula can accurately predict a property’s value especially in a mountain community such as Estes Park where properties can vary tremendously. For instance, it is impossible to compensate consistently for many factors that influence property value including quality of construction, quality of materials used, views, privacy, neighbor quality, neighbors pets, nieghbors recreation habits, paint color, sun exposure, bright or dark interiors, smells, future events, room flow, landscaping, pests, and more.
Zillow.com discloses these variances on their website in specific markets. Unfortunately, they do not disclose the variance for communities as small as Estes Park, Colorado. In Denver, in a location where the majority of homes are in subdivisions with consistent values, the zestimate (zillow’s estimate of value) was off more than 10% of the actual selling price more than 55% of the time. Over all, zestimates have a history of having an 11.6% margin of error in Denver. See this page on zillow.com talking about accuracy.
As a real estate agent, I wouldn’t be in business very long if I estimated property values with an 11.6 percent average margin of error. Do yourself a favor and get the opinion of a local real estate agent or appraiser to establish market value. Otherwise, you run the risk of making very important decisions based on inaccurate data.
{ 5 comments… read them below or add one }
Thanks for mentioning appraisers in a positive way! Kudos!!
I enjoyed my visit to Estes Park in the late ’90′s when I attended a convention in Denver. Stayed in EP and from their went up ‘the hill’ to the top of Rocky Mtn. NP. Gorgeous! Wish I’d known more about the Stanley Hotel b/4 I got to EP…would have liked to visit it. I have in front of me a small pewter train engine memento I bought in a gift shop in EP, a place that specialized in pewter.
No problem with the appraiser mention. People need to be careful when they rely too heavily on online data. It could come back an bite them in a bad way!
Glad to hear you have some great memories of Estes Park! The Stanley Hotel has a ton of history and is still a very prominent feature of Estes Park. Next time you are in town, you should check out the history tour or the ghost tour.
Hi Sam,
This is Russ from Zillow. Quite a fair and even-handed post you have here. We appreciate your perspective, as an agent, and we’re pretty much on the same page about everything you’ve mentioned — well, besides the headline, at least ; ) Especially appreciate that you’ve linked to our Zestimate FAQ and Data Coverage and Accuracy pages for more information.
Zillow’s Zestimates are certainly not intended to replace an appraisal or a Comparative Market Analysis performed by experienced professionals who know the local market well and can visit the home in question. Certainly, this would be the ideal.
Though, this degree of expertise and accuracy does come at a price. And as valuable a service as a professional appraisal or CMA is — and as required as they are in certain circumstances — our Zestimates do provide a starting point for discussion. 5%…10%…15% median error rates — sure. But free and not at all randomly generated, either. And not too shabby for 70+ million homes that our computers have never visited, at that! ; )
Some large portion of 6M+ unique visitors per month are finding value in what we provide. And we hope we’re also able to send some number of our visitors to RE professionals like yourself when their needs are more than our free service can provide.
Zestimates and Zillow’s offerings are tools, just as your services as a professional Real Estate Agent are. We think we can all work together to understand our customers’ needs and to get them the best tool at the right time. Win-Win-Win all-around!
Thanks!
Russ
Russ,
Thanks for the comment! I’m honored to have Zillow.com respond to this post and I’m glad to see you agree on many of the points. I especially appreciate your second paragraph. In my opinion, Zillow.com needs to do more to get this point across to the consumer.
The post was written in response to a recent situation where a potential buyer represented by another agent was interested in one of my listings. The listing was very competitively priced and in very good condition in comparison with other similar properties. The buyer followed Zillow.com and based their offer on the Zillow.com Zestimate. Unfortunately, they were not willing to go over the zestimate price even though the value of the property was obviously substantiated by comparable properties. The Buyer’s perception of value for the property had already been set by the inaccurate zestimate. Basically, Zillow.com killed this deal before it ever had a chance of coming together.
In the consumers mind, Zillow.com is a very strong brand and seems to be a very powerful source of information. Consumers are eager and excited to “discover” this type of information is available for free on the internet but they are also not realizing the information may not be accurate.
Just an update: I was just a tad bit off on my statistics for monthly unique visitors to Zillow.com. We’re up to 10M+ per month now, not 6M.
Only makes your post and our discussion even more relevant, IMHO.
Best of success to you, Sam!
Russ