Liz, Other/Just Looking in California

Just how accurate are online home value estimators, such as Cyberhomes and Zillow?

Asked by Liz, California Wed Apr 22, 2009

My (unprofessional) assumption is that they would seem to provide a good general estimate of the market, but they probably can't account for the details that an appraiser would take note of. What is the margin of error with those online market value estimators? Do they generally tend to reflect lower-than-market values, or higher-than-market values? I also notice some major lenders, like Chase.com, have similar online property value estimator tools. Is one source more reliable/accurate than another, based on your experience? Thank you.

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Answers

13
Hello Liz,

The answer to your question of do the estimators reflect lower or higher than market values...is YES. It's frustrating enough for a Realtor to not be able to rely on them, so it must be worse for you.

I feel that the online estimators are kind of like gossip magazines. They're just for fun. The one I use if I'm going to use one is http://www.eppraisal.com

Your best bet is to have a Realtor check on the actual comparable sales and weed out the ones that were grant deeds over to a family member, etc. Those can really mess up the comp pricing and is sometimes why the online estimators aren't accurate.

An appraiser is the one that can give you the "official" value, but you have to pay for that. Find a good Realtor that knows what they're doing and work with them to get your values as close to actual as possible.

Let me know if I may be of assistance.

Randy
3 votes Thank Flag Link Wed Apr 22, 2009
Liz-
It really depends on your home and if you have made any upgrades or what kind of condition it is in. Online home value estimators will not be 100% correct, if you are wanting to know what you could list your home for on the current market for it would be a good idea to contact a real estate agent to give you a CMA
( comparable market analysis) on your home to see what other homes similar to yours is selling for. With a CMA you go back 6 months and compare the "solds" and "pending" homes to see what they sold for. A CMA is usually free to you and gives you a general idea of what you are looking at for home value. As far as giving you a higher-than-market value VS a Lower-than-market value it goes on what you describe your home as and if you have any upgrades ect. All value estimators are generally the same, what I would suggest doing is trying 2 or 3 and compare to what your results are. Good luck and I hope I answered your questions appropriately.
2 votes Thank Flag Link Wed Apr 22, 2009
Hi Liz,

While these sites can provide a very general idea, the price really depends on condition and the current market price for your particular type of home in its location. This simply cannot be automated. In this market, it is not unlikely to have a $50K to 100K delta with similar homes on the same street. We therefore have to spend time distilling the data before we arrive at a marketable price. I always encourage folks to have their home evaluated by and in-home visit by our office or another qualified Realtor.

This is the truest way to understand the price of your home.

Let us know if we can help you further.

Best regards,

"Rocky" G.H. Hawrysz
Broker Associate, REALTOR®, e-Pro®
Prudential California Realty
Direct: 209-444-6610
Mobile: 209-915-6209
Fax: 209-433-2000
http://www.TeamHawrysz.com
2 votes Thank Flag Link Wed Apr 22, 2009
Hi Liz, forget about Zillow as a reliable valuation source, at least until they can do a better job of accurately estimating!

If you are serious about Real Estate and accurate valuations you must be working with a licensed Realtor/Appraiser – there are just too many variables that go into valuation.

Not convinced? Consider this:
Back in January of 2008 I watched an interview with Lloyd Frink (Zillow Pres). Here are some FACTS communicated during the I-view:

Zillow had just finally officially exited out of "beta" mode. Zillow had changed their appraisal algorithms to be more localized in nature. To measure accuracy of their algorithms Zillow looks over the last 3 mos and compares their Zesstimate to actual sales price. And, here's what they found:

a) Median accuracy (described as the number separating the higher half of a sample from the lower half) was 8.8% of selling price. Note: this is NOT and average accuracy.

b) 25% of Zesstimates were within 5% of selling price, 50% within 10%, and 75% within 20%…...which I suppose means that 25% are within 80%?

For me, this interview cleared up why there was so much “play” in Zillow’s accuracy.

A Comparative Market Analysis by a Realtor will be much more accurate.

Best, Steve
2 votes Thank Flag Link Wed Apr 22, 2009
I couldn't agree more. I had an appraisal done for my house in San Pablo that was $170k more than the value listed on Zillow. Within 2 days, Zillow went from $150k to $272k and back to $160k. The $272k is still not on mark, undervaluing my home by several thousand dollars.
Flag Sun Dec 15, 2013
The margin of error varies greatly for example in my area it's about 20% which if you think about it makes it almost worthless. I've posted a link below where I go into much more detail about the value of online estimates which I hope you find useful.
1 vote Thank Flag Link Thu Dec 5, 2013
Hi Liz,

This might provide you with a better understanding of error rates/Zillow accuracy:

http://docs.steven-anthony.com/ZestimateAccuracy.pdf

-Steve
1 vote Thank Flag Link Sat Sep 14, 2013
Great link!
Flag Sat Sep 14, 2013
Hi Liz -

Thats a good question. Unfortunately it is impossible for online sites like Trulia or Zillow to account for every sale or every nuance of a sale. Their information is based on Internet Data Exchange records which can be less than reliable. However, If you are looking for a general ballpark number on a valuation for a home, these sites can be very valuable.

Regarding the second part of your question, there is no general rule on whether a web estimator typically over or under-values properties; I have seen both many times.

The best idea for you is to hook up with a trusted and reliable realtor in the neighborhood you like and have him prepare a comparative market analysis for the home in question. Your realtor will be able to compile data from the MLS, county records and fellow realtors who may have been involved in the sale of comps to provide you with a very accurate valuation analysis.

Let me know if you need a good realtor in your neighborhood and I will do my best to help you out.

All the best,

Howard Chase
Broker, Howard Chase Real Estate, LLC
Miami Beach, FL
305-532-7470
1 vote Thank Flag Link Wed Apr 22, 2009
Interesting to see this question getting so much attention today, especially since it was originally asked & posted 4 1/2 yrs ago. ;-)
0 votes Thank Flag Link Thu Dec 5, 2013
This is the "age old" question that has been asked by many a home buyer recently. In time these evaluations may become accurate and reliable but for now they are source for information that is chancy. Some evaluations may be accurate while others are far off the mark.

The reason for this is these resources generally do not have the capability to make the distinction between a good or a bad comparison property. The information used is usually taken from a geographical area that makes little to no distinction between a high end gated community and a mobile home park, a desirable neighborhood or a corporate location, and ends up with skewed information that is unreliable at best.

Respectfully,

Bill
0 votes Thank Flag Link Thu Dec 5, 2013
Liz,
You have certainly started a good conversation about companies trying to estimate price via a very, very, very large scale.
I know that I put a lot of time and effort when I go to value a property. I now I would never give an estimate before I actually view the property myself... So many factors are involved.... What is in the house? where is it located? and a million other things go into it..... But to say the estimate of every property in the us without seeing it, knowing all the factors is impossible... It would be like me going into heart surgery, because I read the manual how to do so.... Just doesn't work.....
You need to have a local, experienced Realtor make the call because they work the area everyday, they know what sells and what doesn't... they know a perfectly staged home will bring more money, they know a dump when they see one too.
So, How can a computer give you an accurate number? they cant...
Hope this helps a little as you a getting lots of comments
0 votes Thank Flag Link Thu Dec 5, 2013
To get a general value, Zillow can be helpful. However, far too frequently Zillow lists home values that are inaccurate. This of course is expected because how could one company provide a value for every home in America? The best way to determine value is to consult a local Realtor.
0 votes Thank Flag Link Thu Dec 5, 2013
I read through most of the below answers and they are all pretty accurate. An appraiser, and a Real estate agent for isntance should typically know the area they are working and will be able to compare apples to apples and oranges to oranges and ussually get a pretty accurate picture of the current market. Some of these "estimates" online don't know to take out outliers, or maybe doesn't knwo the next street is a different school district that is highly desirable and therefore the homes are 25-40% higher. Tons of factors are involved and a computer program is only as good as the info that it has. A local agent, local appraiser will have better local knowledge of the area and know what actually compares to most homes and neighborhoods and will therefore be a lot more accurate in my opinion.

Best of luck!

Aaron Sims
0 votes Thank Flag Link Sat Sep 14, 2013
I have zero confidence in these tools. I live in a townhouse where there are other units with identical floor plans. I have noticed that the values reported vary widely even identical units are valued. Even identical units with an adjoining wall are valued significantly differently. It is ridiculous.
0 votes Thank Flag Link Fri Feb 15, 2013
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