|Great read if you are in the business or interested in the market.|
Even their CEO, Spencer Rascoff has more or less admitted the same in a recent LA Times article.
In fact, here's what he said: Zestimates are a good "starting point" but nationwide they have a median error rate of about 8%.
Let's digest that a little bit and then maybe regurgitate.
The median price of the houses I sell is about $750,000. That means that half my sales are above that and half below. It is not an average of my sales. But let's take $750K with an error rate of 8%. Is Rascoff saying that Zillow can be off by $60,000? Yes, he is. More specifically, on the "How accurate is the Zestimate?" tab, while they give themselves 4 stars for accuracy in the LA area, that's based on 36.8% of the homes selling within 5% of the Zestimate. if you are selling $200K homes I guess that's ok. But for $2M properties, not quite sure that really works.
Per the LA Times article, Rascoff's further advice is to use the Zestimate as a "starting point" and then discuss your home's value with an experienced agent or appraiser. Huh?
Unfortunately, few consumers actually do that. Instead they use the data on Zillow's site very selectively. I've never run into a buyer who arbitrarily says let's offer more because Zillow says its worth more. Conversely, I've yet to meet the seller who says, my neighbor's house which is identical to mine just sold for $850K but Zillow says they're worth $750K, let's list it there. Just doesn't happen.
|Zillow CEO Rascoff - looks like a nice guy to me.|
Here's a real life example of how at our prices in the Beach Cities, Zillow's median error rate of 8% can be so devastating.
You may have read on this site last week that I listed a townhouse at 2417 Grant Avenue Unit B. Well that one is already in escrow after 5 days on the market.
Zillow has a Zestimate of $693K. I listed it for $715,000 and we are in escrow at over the asking price.
Here's what I knew that Zillow could not know.
First, the subject property is definitely larger than the tax records, which they are basing their valuation on, show. Exactly how much larger is somewhat debatable, but larger.
Second, the property showed well, really well.
Third, it is extremely sunny and bright and not jammed in like so many other similar 3 on a lot townhomes.
I knew that because I had been in the property. Zillow had not. Zillow knows the map. I know the territory.
|Property Website for my listing at 2417 Grant Ave|