Whether you love or hate Zillow and their Zestimates, it looks like they are here to stay. I am often asked my opinion of Zestimates. “Are Zestimates the last ‘Zword’ in telling you the value of a property?”
To answer to this question, I spoke to Svenja Gudell, Zillow’s chief economist. For balance, I checked in with several of my clients for their opinion of Zillow and Zestimates.
Here are my questions. Zillow’s answers are followed by my clients’ thoughts.
What criteria does Zillow use in arriving at a Zestimate?
Gudell spoke about Zillow nationwide. “Zillow uses three types of data — homes’ characteristics, public records, and the MLS [multiple listing service] — to calculate Zestimates. In addition to this, 60 million users have logged onto Zillow and updated home facts. Three times a week Zillow recalculates the value on over 100 million homes. Prior to the recalculation of home values, the data is cleansed or scrubbed.” This corrects or removes corrupt or inaccurate records from Zillow’s database.
I interrupted at this point in the interview and asked that we focus on San Francisco, because the city is different. There are no suburbs here where square miles of homes are the same.
It turns out the Zillow model is the same both locally and nationally. However, to address the complexity of San Francisco’s housing, the city is broken down into small areas to individually calculate the value of homes in microneighborhoods. Zillow uses more than 1,000 models in San Francisco to calculate Zestimates.
“This is a very intricate process,” Gudell emphasized. “Zillow takes great care and pride to make sure Zestimates provide the best possible data available.”
Does Zillow find that its users are satisfied with Zestimates? Please answer on a scale of 1–10 (10 being the most satisfied).
I was a bit surprised to hear that Zillow never polled its users. Maybe the proof is in the pudding, or in this case the number of users. There are more than 142 million unique users. The numbers speak for themselves. This may be enough for Zillow.
How does Zillow address complaints about a Zestimate?
This question was not directly answered. However, if homeowners are not satisfied with their home’s Zestimate, they may update the value of their property on Zillow. As far as addressing the general issue concerning the accuracy of Zestimates, it is important to remember that Zestimates are not the final Zword on the value of a property. In a city like San Francisco, where it is rare to find two homes that are the same, Gudell said, “It is important to think of Zestimates as an initial point to go on.”
What my clients say about Zillow
In a small sampling of my clients, who for the most part work in technology and finance, I found the responses below summed up the points I hear most often.
1. “Zestimates are O.K. for the most part, though quite often it appears Zillow is unaware of remodels, in which case the estimate is way off. I would give them a 7/10. Zillow is the best for Zestimates, Zestimate forecasts, and for price/tax history. Redfin has the best interface for making personalized open house schedules. Trulia is the only one with crime maps.” (See my October article, “A crime query.”)
“Redfin and Xome (newest real estate app I’ve come across) both seem to get updated pretty quickly when a home is pending/contingent. Zillow lags behind, and sometimes shows homes on sale weeks after they’re pending or even sold!”
Note to Zillow: Zillow, how do you explain the time lag?
2. “I do use Zillow. The worst part of the site is that it is using Flash, which slows my machine down terribly or crashes.
“As for the Zest-imates, I do not pay much attention to them. I find they are most reliable when the housing stock in a particular neighborhood is all similar. If you have houses, apartment buildings, commercial mixed with different ages and conditions, the Zestimates are often very wrong.
“I would give the usefulness a 4.”
3. “Unfortunately I do not use Zillow, as it doesn’t work well for apartments. Only houses!”
4. “I do use Zillow on occasion. With the Zestimates, I feel like they are a 6 in terms of accuracy.
“Overall it is good for getting a trend, but not an exact number. During a time of increases, it under-estimates and during declines it over-estimates a price. It also does not take into account finishes or similar things.”
My personal experience: Driving across town, sometimes it feels like there is a major remodeling project taking place on almost every block. Keeping the data current in San Francisco, where rarely two homes are alike, has got to be a challenge for Zillow. If homeowners are contemplating selling their home, I would recommend they go to Zillow and check the value of their property. If it is too low, it is possible to change the value by adding new information that will be evaluated by Zillow. Remember the site recalculates home value three times a week.
The housing market in San Francisco is complex. Microneighborhoods, small lots, remodels, unwarranted rooms, and bathrooms are the rule. No website alone can fulfill the job requirements of real estate agents, who have a major role to play helping clients deal with the reality of buying or selling a home.
To pin down the most accurate value of a home, a licensed appraiser is the best choice. Next in line is your real estate agent who can provide you with comparable sales in your neighborhood. Unless there is a specific reason you need an appraisal, your real estate agent will be the best choice for finding the value of your home in the current market.