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Zesstimates: New and Improved?

new and improved

Better, But Still Room For Improvement

A recent post on Zillow.com boasted of version 3 of their Zesstimate algorithm.  If you’re not familiar with Zillow, or their Zesstimates, it is an automated valuation tool, designed to help sellers (and buyers) determine the value of their home. In past years, it has garnered some praise, but even more criticism for its inaccuracies. In fact, back in 2006 I wrote a post about Zesstimates and how bad they were.  You can read that post here.

Shortly after my post (not that I believe I had any influence on them, as it was more of a coincidence than anything else), they developed version 2.0 which allowed homeowners the ability to add information to their database with the hopes of generating more accurate data.  Many homeowners flocked to the site, eagerly correcting the erroneous information that was stored in their county tax records, with the hopes that by entering updated information, they would see their zesstimates soar thru the roof, thereby affirming what they inherently believed from the start – that their home was the most expensive (or rather highest valued) home on the block.

Tax Records Are Never Wrong, Are They?

The problem as I see it, is that homes are not a commodity in the sense that every homeowner personalizes and changes that once blank slate to their own personal needs and/or tastes. And what happens when a homeowner remodels the home?  Case in point: My home was built in the 1970’s and had an unfinished basement.  The previous homeowner finished it off, and thus the basement is now considered “livable space”, yet that information isn’t reflected in the tax records.  It also has more bathrooms than is stated in the records.  I could go to the county and make sure their records match what is truly in my home, but why? If I increase my square footage and raise the assessed value of my home, then my taxes will go up.  As long as I’m living here, why should I care what is in the county records?

Oops

The Real Estate Market Is A Moving Target

It is very difficult to generalize and generate a specific value on a particular home, based solely on inaccurate data on other “similar” homes in the area.  Sure, you can generate a value range, but that’s all I think one can take away from the data.  And even that is subject to an error margin of nearly 10% as evidenced by Zillow’s own admission.  According to their blog post, the error margin is now down to 8.5% from a previous 12.7%!  Of course, those of us in the Pacific Northwest should be ecstatic that in our area, their error margin is only 6.2%, down from a previous 10.3%.  Oh, by the way, the market has declined at a rate of 4-5% over the past 6 months in our area.  I wonder if that is taken into account in the zesstimates?

Who Ya Gonna Call?

If you really want to know the value of your home, call your real estate agent.  If you don’t have one, call me!  I spend several hours every week looking at homes in my area for clients, and to stay on top of the market.  One of the services I provide to my clients (and potential clients) is to generate a CMA (Comparative Market Analysis) for them upon request.  These reports usually take several hours to complete, but are much more thorough than the zesstimates on zillow.com.

What are your thoughts? Have you looked up your home value on Zillow? How accurate do you think it is? Drop me a line and let me know…

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