On February 29, Rascoff sold a Seattle home for $1.05 million, 40 percent less than the Zestimate of $1.75 million shown on its property page a day later. The gap between the Zestimate of Rascoff’s former property and its sales price has decreased only modestly since then. Zillow readily acknowledges that Zestimates can be inaccurate, but some consumers can still take them at face value, causing headaches.
“ Zestimates are only a conversation starter for pricing a home, not the final word on its value.”
This shows the $1.75 million Zestimate of the property formerly owned by Zillow CEO the day after the home sold for $1.05 million. Bringing up the Zestimate of the property Rascoff recently offloaded will help him deal with the frequent pushback he receives from homeowners “who think Zillow is the magic 8-ball,” he said. ‘We missed’
Zestimates on Rascoff’s former home have certainly been overstating the property’s value, said Zillow Chief Analytics Officer Stan Humphries. “The fact that we missed and there are empirical reasons we missed — that’s a great conversation that real estate agents should have” with consumers, he said, citing the property’s irregular lot and location on a busy road as partly responsible for its Zestimate’s inaccuracy. But if the success of the transaction were judged by the property’s Zestimate, it was a failure. The home’s Zestimate was $1,750,405 on March 1, the day after the property sold for $1,050,000. If that Zestimate were accurate, it would mean the chief of the biggest name in real estate and the recent co-author of a book about “the new rules of real estate” would have sold his home for 40 percent less than it was worth.
Zillow puts the Zestimate’s national median error rate at 7.9 percent, meaning half of Zestimates nationwide are within 7.9 percent of a home’s sales price and half are off by more than 7.9 percent. Zestimates can’t take into account “non-quantifiable facts,” such as layout design or lighting, and these facts can have much more of an effect on the values of luxury homes than less expensive properties.. Real estate agents can see how special features impact a property’s value, but the “Zestimate algorithm can’t know” and “at this point in time, it’s not designed to know,” she said.
So... when it comes time to either buy or sell a home, Zillow is a great place to start, but not to end. Like most online tools, Zillow is incredibly helpful when used properly and can quickly become a hindrance when relied upon too heavily.
Sources: HTTPS://WWW.INMAN.COM
