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Zillow Wrong Again?

Don’t Believe Everything You Read On The Internet

I’ve written about this before in a previous blog post [READ HERE], but it’s nice to have my thoughts backed up by an independent and respected entity.  This short video interview from The Wall Street Journal summarizes how Zillow’s Zesstimates can be so far off the mark.

A Woodinville Example

Let’s take a look at two homes in Woodinville, WA where I live.  These homes are currently listed for sale and are situated about 1.5 miles apart in desirable, rural areas.  I have had the opportunity to visit both homes and feel that aside from the interior design choices made by the respective owners, they share many similarities with regard to quality.

zillow example1

Home #1 is a 6000 sqft home on 2.4 acres, built in 2000.  It is a custom designed home with 4 bedrooms and 5.25 baths.  This home features 3 stories (2 story + basement).  The list price for this home is $1,150,000, and the tax records AVM (automated valuation model) shows a value range of $800,000 – $1,350,000.

zillow example2

Home #2 is a 5800 sqft home on 2.8 acres built in 2002.  Also custom built, this home features 4 bedrooms and 4.25 baths. Like the first home, this also is a 2 story + basement layout.  This property has a 3 stall barn and pasture area.  The list price for this home is $1,800,000.  The tax records (AVM) show a value range of $1,100,000 – $1,400,000.

Steven Faulken, Where Are You?

In the movie War Games, the computer named Joshua supposedly had the ability to learn from experience, thanks to the brilliant programming skills of its creator.  In real life, we have no such tools at our disposal, and this fact is evident if you’ve ever used Zillow to look up the value of your own home.    So why do two seemingly similar homes have such a disparity in value or asking prices?  Could it be because there are so many intangibles that are impossible to value in a computer model?  Where is Big Blue??

If The Data Is Wrong, Just Input Your Own

Programmers often used the term Garbage In – Garbage Out to explain that if you have bad data going in, no amount of manipulation or massaging can create good output.  Zillow created their own solution to this problem.  Just let the consumers correct the data on their site and/or add new updated information.  I see several flaws with this approach:

  1. As a cynic at heart, I see this as just a marketing ploy by those sneaky folks at Zillow to target you in the future.  By agreeing to input your home’s information, you are granting Zillow the irrevocable and perpetual right to use and distribute this new information however they see fit!  I equate their approach to those of Phishing scams.  If I were to send you a letter stating that your credit card account was incorrectly entered in my database, and that I would like for you to fix it by providing me the correct account number, would you fall for it?  What makes their approach more believable is that consumers flock to their site wanting to correct it!  My question is WHY?
  2. If you were a buyer, would you look to Zillow to help determine the value of a home you wanted to buy or would you seek out the services of a professional real estate agent? Would you really believe and trust information provided to you by the homeowner, especially with regard to the square footage or other improvements, or would you want an independent third party to verify the data?  If you chose the latter answer, then why would you even look on Zillow in the first place?
  3. If only a small percentage of the data on the site is truly accurate, having one or two homes with correct information doesn’t change the value enough to make any significant difference.

Buying Or Selling? Use A Professional

Don’t trust the sale or purchase of what may be your single biggest asset to a computer model.  The market changes faster than the programmers at Zillow can code.  Be smart and find a Realtor that you can trust…

When REALiTY BiTES, Bite Back!

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