Wednesday, August 26, 2009

How Accurate is Zillow when buying or selling a home in Northwest Austin?

How Accurate is Zillow when buying or selling a home in Northwest Austin?


If you are reading this then you know that people look to the Internet as a source of information for whatever it is they would like to learn more about. Hopefully that is why you are here. With Real Estate, a very large percentage of buyers and sellers head to the Internet and read articles, look at homes, etc. before they even speak to a professional.

There are major corporations that are aware of this and they market their sites as "valuation sites". When I hear something like this, I can't help but be skeptical. If a website knew the value of every home, it would make my job so easy. If I was going to list a home, I could just look on the master website and look up the value of the home. No mystery in pricing, no advertising, it is worth what it is worth so a buyer would most likely put in an offer the next day. Obviously, a website can't do that. But, it could get close, right? Let's find out...

Zillow assigns a "Zestimate" to homes in its database and plots them over a map. It also includes basic features of the homes. For example, 123 Anywhere St. Zestimate: $179,500. 3 bedroom / 2 bath 1875 square feet. Seems OK but, how do they determine the zestimate?

Zillow says, on their own website, "We compute this figure by taking zillions of data points".

Oh!, OK so zillions of data points must make the results pretty accurate, right?

Now lets look at Zillow's Accuracy Rates (Also from their own website)
By the looks of this, in Travis County, 99% of homes have been given a Zestimate and only 16% of homes are within 20% of the actual sales price. 20%??? On an average priced home, which in NW Austin is around $200,000, 20% is a range somewhere between $160,000 and $240,000. I am confident that I can get within 20% of the value of a home in NW Austin if you tell me the street it is on and how large it is. I am not being trying to be arrogant but, $80,000 is a huge range. On top of that the median error is 60%. This means that half of the homes have an error larger than 60%. 60%?!?!?!?!?! On $200,000 that is a range of $80,000-$320,000. Who couldn't figure the value between a range like that? Williamson County is slightly better that that but still very, very inaccurate.
So, how does this affect buyers?
When a buyer looks at the "Zestimate" of a homes they like in NW Austin it is generally about 10-15% low based on actual sales data from the MLS. Based on the Zestimate, the buyer will most likely want want to put in a super low offer because the list price will seem 10-15% higher than the estimate. Guess what? This is a waste of every ones time! NW Austin is a SELLERS MARKET! If it is priced right, the home will sell! They will not consider an offer that is 15% below the list price based on a Zillow Zestimate.
So, how does it affect sellers?
Unfortunately, people that would like to sell their homes, look at Zillow and freak out! There is no way they can move based on that price. That is because in most cases, there is a difference of $15,000-$20,000 between the Zestimate and what they can actually sell the home for in today's market. So they don't even talk to someone about it....and don't sell...and don't move into their dream home.
What should we do instead?
The easiest answer is to contact a professional. Make sure you are speaking with someone that really knows your area. A real professional REALTOR does a lot of research. There are a lot of homes that are being under priced in Northwest Austin because they are working with an agent that does not know the area.
I meet with sellers and give them a complimentary (FREE!) consultation to talk about their homes. That doesn't mean you NEED to sell... I just LOVE talking to people about their homes.
Click HERE to request a FREE Consultation.
I also meet with buyers to talk about neighborhoods that may work for them based on location to work and schools, area amenities, price ranges and styles. No pressure..just talking.
Click HERE to talk to me about the possibility of buying a home OR
Don't feel like talking yet?
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Posted by Brian W Martin REALTOR for The Pinnacle Group of Keller Williams specializing in working with Buyers and Sellers who want to make smart decisions about their home in Northwest Austin.

2 comments:

  1. So true. Zillow is about as much use in calculating Northwest Austin home prices as a chocolate tea pot is in making a cup of chai.

    Especially when Zillow themselves say that it's a bunch of hooey if you click through far enough

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  2. I am not sure if I know what a chocolate tea pot is but thank you for the comment!

    Great point! The most powerful argument against Zillow is provided by Zillow. I'm not maing these things up. They are stats from their own site!

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