Zillow “Zestimates”

How accurate is Zillow? Sometimes right on, sometimes not. Here are ten recent sales with their selling price, assessed value and Zillow estimate. Zillow’s right some of the time, the assessed value is closer on others. The one that is almost always wrong is the original estimate of value by the agent.

Address                     Orig, $              Sale $                   Assessed $                          Zillow

113 Cat Rock     $3176 mill.        $2.850                  $2772                             $4077

38 Quail               $2925                 $2.560                  $2.505                            $3325

100 Pemberwick $490,000       $515,000           $327                                  $583

34 Bowman     $2195                   $1980                      $1090                             $1975

99 Husted     $5250                     $3.900                    $2.013                             $3.873

156 Stanwich $3685                   $2.450                     $1.788                            $2351

58 Fairfield    $ 1695                    $1550                      $1254                              $1695

12 Ledge          $3795                    $2.640                     $2.30                              $2.595

16 Edgewater $1795                    $1.678                     $1.127                             $1.527

45 Byram        $12.250               $8.500                      $8.434                            $6.368

UPDATE: yes, as several readers have commented “assessed value” is 70% of 2005 market value – that’s why I’ve been mentioning the figure so often in the past months: in many instances, selling price is now close to assessed value, representing a 30% drop from 2005. In fact, since houses were selling for an average of a 2.2 X the assessment back then, the drop is larger, but it gets complicated, so I stick to the 30% figure. In some instances the assessment was way off and the sales price reflects that, up and down.

Zillow does seem to be getting better than it was, but it would certainly be foolish to buy or sell solely on their numbers. For instance, while the reader would “throw out” Zillow’s estimate of $3.325 million for 38 Quail Road, I represented the buyers on that deal and I believe Zillow’s estimate would have been accurate in 2007. It’s a pure land sale, by the way – the reader is right that the house wasin serious need of renovation and will be replaced.

As for the reader who claims he’d rather use Zillow and do without an agent, (a) if he’s a buyer, he’ll save nothing – the seller’s agent will just pocket the full 5% commission rather than splitting it and (b) buyer or seller, relying solely on Zillow could cost you a lot of money, as Quail Road demonstrates on the buyers side and 45 Byram Shore demonstrates on the seller’s. Again, there are lots of factors to consider in deciding what to pay for a house or where to price it. Zillow is one tool, assessed value is another and the advice of an agent who knows what’s happening in the market is another.

19 Comments

Filed under Uncategorized

19 responses to “Zillow “Zestimates”

  1. Riverside Dog Walker

    Very interesting analysis. What is most surprising to me is the strong correlation of assessed value to market value. Is the assessor really that good? Is the price a buyer is willing to pay unduly influenced by assessed value?

    It would seem that a knowledgable seller could save themselves a lot of trouble by understanding the relationship, in most cases, of assessed to market value. Where they are clearly out of whack, it is interesting that the zestimate gets it fairly right.

  2. tom

    Assessments are 70% of market value. You need to gross up your assessed values to factor that in – unless you did already, please reply

  3. zillow rules

    people should use zillow and sell it themselves,
    f #$@ the realtor. really. realtors should charge 1% with percent of profit for commissions like waldo noel did to get rich with madoff.

  4. Pete

    Just for clarification, the assessed value is 70% of the Town’s estimate of value as of 10/1/2005.

  5. tom

    whatever the assessment numbers, zillow looks spot on. I would throw out Pemberwick (too low valuation) and 38 Quail (clearly a house in need of full renovation). Other than that pretty good. 113 Cat Rock throws Zillow off because it is labeled with 6 br, 7 ba, 6,000 sq feet, and Z does not do a great job of appraising the land (location) value in every instance. But overall I give them decent marks (a B+) for ‘ball park’ estimates, which really is what they are meant to help with. Anyway, thanks for doing the research, interesting

  6. concerned

    2005 assessments are still too high for most of greenwich.

  7. Jack Martin

    Maybe all that is happening is sales prices have just equaled assessment prices at the moment.

    In the future assessment price may seem very high in relationship to sale prices and then again they may look very cheap.

    Only time will tell.

  8. Kidding Really??

    sadly Tom is correct – the era of discount real estate brokers or super deep discounting to full service is on the horizon. happened in stock trading and just about everything else. 5% is a thing of the past. If I was selling a house – I would throw my listing out there with a max 2.5% commmission – take it or leave it. And I wouldn’t price my house like a typical Pollyanna brokers do in Greenwich.

    • christopherfountain

      Well that’s okay Kidding, and I suspect that you’re right about the future. But for now, if you offered 1.25% on the buy side, I’d leave it.

  9. Walt

    Dude –
    You are correct. Zillow is a tool. And you are a tool as well. As are most of your fellow “professional real estate agents”. Where exactly is your value added? I got people access to Bernie, which they could not do on their own. So I had exclusivity, and deserved every penny of my 2 & 20%.
    What do you guys do for your 6%? Other than be a cab ride?
    I know what I like. I don’t need you to tell me the mildewed basement is a wine cellar. And I can buy and find any house I want, so why EXACTLY do I need you? I pay 6% 0n $10 million for the pleasure of farting in your car? I don’t think so!! How much is that? Like a $100K commission? For a frigging car ride and a Starbucks? Insane I say!!!
    You have a better gig than FGG had going. So Kudo’s to you. I still can’t figure out how you pull it off.
    Maybe I should call the SEC?
    OFF TO LUNCH!!!!!
    Your Pal,
    Walt

  10. Anonymous

    You do have to be careful with Zillow because the owner can log on and change the numbers and the Zestimate. If they join, the go into the house data, they can make the lot size much bigger and the house have 10 bedrooms and a different square footage.
    There is a house on Milbank which has done that and I have noticed many others.
    A clear message given by the owners that they are trying to rip off the buyer. I don’t bother considering the property when theu do that. No point.
    The Zestimate can change by a million or so if they squew the data. So you always have to look in the house data section to see whether the owners have played ‘silly beggers’.

    Prudential on the other hand, advertise with Zillow for all their properties and often prevent the Zestimate being published. Good strategy for them, clouding the mystery, but I find it really annoying. That puts me off the property also, as I tend to trust Zillow’s 2002, 2003 data and that is where I can evaluate the possible value before the stupidity which followed in 2004-2006. That isn’t to say that the value is the Zestimate in 2003 but it gives me an idea with working room.

    We bought in early 2004 and Zillow say that we are 10-15 percent below that (in Florida). Not too worried though as we don’t intend to sell.

  11. anonymous

    Residential RE, esp high-end, is too much of a controlled, localized, emotional, inefficient, illiquid market more akin to high-end car sales or M&A banking advisory than trading of public, liquid securities

    Suspect frictions (generous fees) will remain large, despite tech advances…and irrelevant to any shrewd high-end buyer who is unlikely to buy another primary shelter in his life (unless divorce (a far more costly, friction-rich event) occurs)

    • christopherfountain

      It is an inefficient market, anon, but one that’s slowly becoming more transparent. Which is probably why top brokers like David Ogilvy tend to resist transparency – when you control the information, you control the market (I say that in an admiring sense, even if I suspect the days for that kind of control are passing). For now, I’m confortable that I provide value for the money I’m paid (don’t tell Walt). If I can no longer provide value, the market will recognize that long before I do and I’ll stop making money. But I can always dust off my law license and move on to that other highly lucrative specialty you mention, divorce law!

  12. Retired IB'er

    Chris,

    On the fee side I was wondering how you think the brokering community would react to this:

    If you are a sophisticated buyer (please hold the laughter) could you not use an agent and say to the listing agent you would agree to pay them 3.5% (the remaining 1.5% comes back to buyer). At the time you propose this fee structure, you make it clear if declined, you will higher a buyer agent; and so, the selling agent would then get only 2.5%.

    What do you think?

    • christopherfountain

      What do I think of that as a buyer’s agent IB’R? Give me your address and I’ll be over with a (Molotov) cocktail for you tonight. As a buyer, hey, it could work. Just don’t use a buyer’s agent to do all the scut work for you, winnowing out the hundreds of dogs out there and then go try this (people do, you know). That’s rude.
      On the other hand, and to Kidding Really’s point, there are a lot of agents who you’d be better to avoid in the first place and if that saves you 1.5% blessings on you my boy. Warning: it’s been my experience that brokerage houses are fiercely devoted to commissions and even if your proposal would save them advertising costs (if they pay those anymore) and time, I’d expect most managers to clutch the full 5% to their bosom crying, “it’s mine, all mine!”. Bring a gun.

  13. Kidding Really??

    I hear you Chris…. I know brokers who do great work and are worth full commish. But look at how many do absolutely nothing but tell the seller a story about how much they can get which turns out to not work out quite the way it was hoped. Price cuts and too many months on the market. I’ve said it too many times here – price it right the first time.

  14. Retired IB'er

    Don’t get me wrong, Chris, I think if most agents handled themselves like you do (i.e. looking to truly get the best price through real research) than the fee is worth paying. The problem that I see is that the majority of brokers are “order takers” and their input on value is useless.

    Where there is real value added, a broker can easily save a buyer more than any reduction in fee they might be able to negotiate in my scenerio. Smart agents can help a buyer avoid “bad” properties, for example.

    The problem is that there are very few savy agents. Most are simply focused on just getting a sale.

  15. HG

    I bought my current home about 10 years ago in a buyer’s market where bidding wars were common. I was working without an agent and was the first to look at my home, bid the same day, etc. I felt the seller’s agent had a pretty big incentive to move forward on my deal, plus I assumed he had the flexibility to rebate some of the larger commission to the seller to make the deal work. I wonder what CF’s thoughts are on whether buyer’s agents provide more value in a buyer’s market–where knowledge of the asking price history, comparable listings, the seller’s situation, etc might have more relevance to an actual negotiation on price…

  16. HG

    Sorry – I meant I bought my home in a seller’s market…obviously I need help with the basic terminology…