Zillow.com has given some homeowners a false sense of security about the value of their homes with the popular “Zestimate” feature on the Zillow website.
Two Zillow sales executives recently confided to Beacham & Company that the median margin for error for Zestimates is 10 percent nationally, meaning half of all Zestimates are incorrect by more than 10 percent when compared to the ultimate sales price of a home. In other words, a home that a Zestimate indicates is worth $500,000 has a 50/50 chance of being off by more than $50,000.
Much of the reason for the dartboard-like results produced by Zestimates is that Zestimates rely on tax records which are often inaccurate or outdated. And square footage – a favorite data point of Zestimate enthusiasts – is usually the data point that is most often inaccurate in the tax
records.
Think about it: If Zillow uses the sales price of one home to establish value for another home and the square footage of one or both homes is incorrect, how can the Zestimate accurately predict the value of any home? The answer is it can’t, said Dac Carver, Vice President and Managing Broker of Beacham & Company.
“Zestimates give new meaning to the old term ‘fuzzy math,’” Carver said. “Real estate brokerage firms could easily duplicate the Zestimate feature on their websites but you don’t see any because it’s disingenuous to assign a value to a home using data points that may or may not be accurate.”
Zillow and other websites such as Trulia also wreak havoc with data provided by real estate firms, which have no control over the data once it’s been distributed to such sites because of data sharing agreements imposed by these websites. Some of the common issues with these websites include outdated property status or price and inaccurate square footage or other features.
A number of real estate brokerages around the country have opted out of Zillow and other third-party websites. Among them are Edina Realty in Minnesota, Dickens Mitchener in Charlotte, N.C., and Abbott Realty Group in San Diego.
“We are watching how these companies are addressing the problems with Zillow and Trulia and will take action that is in the best interest of our clients and our firm,” Carver said.
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Beacham & Company, Realtors is an independent, locally-owned, full service residential real estate brokerage firm that specializes in Atlanta luxury real estate. The firm is located in the heart of Buckhead at One Buckhead Plaza next to the St. Regis Hotel and has more than 80 licensed sales associates. Beacham is the top selling office in Atlanta by dollar volume of listings sold and its agents are the most productive by dollar volume of real estate sold.
