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Question About Zillow
Old 10-09-2013, 09:44 AM   #1
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Question About Zillow

I live in a townhouse community (18 townhomes) that are identical structurally. The only differences are cosmetic and unique to each home's interior. The exterior, construction materials, square footage, etc. are all the same. All of the homes are more or less identical in terms of location, e.g. none are on major roads, they all bascially are surrounded by the similar properties.

I looked on Zillow and there is over a $100,000 difference between the estimated home prices from the highest valued house to the lowest. (The price ranges are between $700K and $800K.) I never put a lot of stock in Zillow estimates, but I thought these differences were off the charts. Does anybody know how Zillow determines its prices? In my situation, I would expect the algroithm ZIllow uses would recognize the similarities of the townhomes, and price them more consistently.
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Old 10-09-2013, 10:08 AM   #2
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I have always thought that they base it all on square footage ...with the only added difference if the very home had sold for more or less.
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Old 10-09-2013, 10:11 AM   #3
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Maybe the 800K one sold at a premium at one point for some reason (lot of upgrades, furnishings and extra closing costs included, etc) and the $700K one sold more cheaply due to a foreclosure or stress sale, with poor condition. Also is there any difference in the taxation value? I think Zillow just uses publicly available data like this, though I understand it uses comp sales as well, which would pull the units closer together. It is odd, and more reasonable not to put much stock in Zestimates. I view Zillow as entertainment and a nice interface for seeing homes for sale in an area.
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Old 10-09-2013, 10:22 AM   #4
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Zillow enables property owners to modify some aspects of the record in order to estimate a higher price. Examples would be a finished basement, new roof, remodeled kitchen.
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Old 10-09-2013, 11:51 AM   #5
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GolferWannabe, think of it this way. If nothing ever changes on the outside, the homes would always be of the same value except for price increases or decreases in the housing market. The property taxing authority never knows what you do inside unless you have to pull a permit for some major improvement. The changes in value as you are describing is no doubt due to recent sales in your area. As homes sell for more/less in your area the value of your home would follow that trend.
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Old 10-09-2013, 02:12 PM   #6
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My block consists of 12 identical ocean view homes, ranging from 547 to 667K on Zillow. The one at the bottom was just remodelled. I'm next price up and seriously overdue for a remodel. Grain of Salt anyone?
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Old 10-09-2013, 02:18 PM   #7
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Quote:
Originally Posted by ProGolferWannabe View Post
I live in a townhouse community (18 townhomes) that are identical structurally. The only differences are cosmetic and unique to each home's interior. The exterior, construction materials, square footage, etc. are all the same. All of the homes are more or less identical in terms of location, e.g. none are on major roads, they all bascially are surrounded by the similar properties.

I looked on Zillow and there is over a $100,000 difference between the estimated home prices from the highest valued house to the lowest. (The price ranges are between $700K and $800K.) I never put a lot of stock in Zillow estimates, but I thought these differences were off the charts. Does anybody know how Zillow determines its prices? In my situation, I would expect the algroithm ZIllow uses would recognize the similarities of the townhomes, and price them more consistently.
Sometimes they revert to ancient animal bones or dice...

I have two houses built 10 years apart that are on adjacent lots, and the zestimates go in opposite directions from month to month, even though their characteristics, amenities, and levels of maintenance would have them going the same direction.

On one of the houses, Zillow carries a recent "sale" attributed to public records, that must be causing a lot of heartburn as a comp in the neighborhood as it is about half the market value of the place. I have tried to get them to correct it several times, but it doesn't get through, and ultimately i don't care. The house hasn't sold since I built it!

Automated valuations are like trying to forecast weather in a place you have never been to, several states away. Algorithms, bah! gigo.
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Old 10-09-2013, 04:37 PM   #8
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I recently purchased a home. At exactly the Zillow cost which exactly equaled independant appraisers value. Coincidence ? perhaps
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Old 10-09-2013, 04:38 PM   #9
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"Does anybody know how Zillow determines its prices?"

Howdy folks, Jay T from Zillow here.

This link may prove informative -- "What is a Zestimate"

And we publish Zestimate accuracy down to the county level here.

The Zestimate isn't intended to replace a real estate professionals opinion of value, nor is it an appraisal. It's a great starting point to look at home values, but any AVM (Automated Valuation Method) has inherent limitations. We can't see inside the home for upgrades, if the neighbor painted his house purple, or if the dairy farm down the road smells the place up when the wind blows from the south.

It is however, useful for looking ar pricing trends over time, and getting an overall idea of home value.
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Old 10-09-2013, 09:03 PM   #10
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Originally Posted by JayT View Post

The Zestimate isn't intended to replace a real estate professionals opinion of value, nor is it an appraisal. It's a great starting point to look at home values, but any AVM (Automated Valuation Method) has inherent limitations. We can't see inside the home for upgrades, if the neighbor painted his house purple, or if the dairy farm down the road smells the place up when the wind blows from the south.
Zillow might be able to factor in things like interior upgrades by comparing past zillow estimate to past sales. I.e. if the house sold 4 years ago for 10% above it's estimate (at the time) this might be an indicator that the house is "upgraded". This could then influence future zillow estimates.
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Old 10-10-2013, 10:40 AM   #11
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There is a lot of slop in their data. If a recent sale put the finished basement in the sq footage, then its going to add to the noise. In my area its a mix of sq ft, age of house, and lot size bumped up against $ per sq in the area.

I see it change on mint, but it doesn't make it to my nw spreadsheet. The sales data is also very incomplete in my area, but I will look at it since I am nosy.

Good social media team it seems though.
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Old 10-10-2013, 03:02 PM   #12
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All of these estimates or "zestimates" are just that. Three years ago, we extended our screened lanai which cost $5000. Had to have a permit for this and so the world knows about it since it's on the tax rolls (changing the outside appearance of the home). If I renovate my bathrooms and kitchen to the tune of $50k, who knows about it? It certainly raises the value of my home but if no permits are pulled, what's out there to tell the world what I did to our home.
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