I’m as curious as the next person, and have checked Zillow out more than a few times. I post my listings there, and in the past, have even paid for advertising. Last year, I sold a client’s home that I’d listed there.
I’ve tried to remain neutral in my position.
However, when I read this post “The Zindex Illusion or How to Sell A Housing Report Without Using Actual Home Sales today, I became more than a bit concerned about the currency of the data.
(UPDATED 5/12/08, 2:30 pm: I feel that I posted a concern above, without understanding all the issues present. Please read comments below to gain additional perspective about how the Zestimates are calculated.)
Tax record values are notoriously out of date. When I complete a pricing analysis for current and potential clients, I always review the tax record, and it today’s market, the valuations seem to be even farther off than ever. And in many cases, considerably higher than the market will bear.
While using home sale prices is looking into the past, using tax valuations is looking much further into the past, so far so, that to me, they are meaningless. In Arizona, I got my valuation notice for my 2009 property taxes in mid-February 2008. So, my value for next year is based on data that is well over a year old.
When I prepare a Comparable Market Analysis (CMA) for a client, in preparation to buy or sell a home, I look at data that is much more current. In most cases, the MLS data I choose is six months old, but if there is a lot of activity or price change, I only look three months back. This gives my client a much more accurate view of the current market, than if we were to consider the assessed tax value.
And just recently, I’ve started subscribing to Altos Research reports. These reports track real time listings data, which does not include the level of information I can get from my local MLS regarding closed sales, but does give me a current (updated weekly) picture of what the trends are for currently listed properties. Recently, in one South Scottsdale zip code, inventory and days to sell started decreasing, while listing prices were starting to increase. Not a detail that an annual tax assessment would pick up on.
Staying in tuned with real time data, is how I can best serve you in suggesting an appropriate price to list or or purchase your home at. Zillow is one tool that you can use to start looking for a possible home valuation, but in reality, you need to look at data that is much more current. As a REALTOR, I’m have been zinged more than a few times, by potential clients who have questioned my abilities, when compared to that of Zillow. One thing I do feel comfortable saying is that, with my math degree and real estate experience, coupled with current homes sales data and a first hand viewing of your home, I can give you a much more accurate market assessment of your home, located in Scottsdale, or Phoenix, or Mesa, Arizona. Try me!
12 responses so far ↓
1 Jay Thompson // May 12, 2008 at 9:19 am
But Zillow DOES use recent home sales data…
That said, their “valuations” are *estimates* by their own admission.
I’m not here to defend Zillow, but I believe Joe at Sellsius is mistaken when he says home sale data isn’t included in Zestiamtes/Zindexes…
2 David G from Zillow.com // May 12, 2008 at 9:33 am
Hi Dru, it’s David G from Zillow.com
I’m glad to hear that Zillow’s been working for you!
Zillow’s home value trend (Zindex) report most certainly does include recent sales information. Recent transactions the most important input to and Zestimate values on Zillow and to the Zindex home value trends report. Please note that the post you cited is totally incorrect about how Zillow’s home value trends are calculated.
3 David G from Zillow.com // May 12, 2008 at 9:53 am
Recent transactions *are* the most important input
4 Dru // May 12, 2008 at 10:26 am
Jay and David, Thank you for correcting me. I will update my post. Is there a reference for how the data is calculated that I could send readers to?
5 Joseph Ferrara.sellsius // May 12, 2008 at 10:40 am
To say that sales data gets into the zestimate mix is not the same as saying actual sales data is used in the Zindex. The Zindex is ONLY zestimates. The accuracy of these zestimates is not known until a sale actually occurs.
Thus, even if no sales took place in the quarter, a Zindex report would still be produced.
6 Joseph Ferrara.sellsius // May 12, 2008 at 10:50 am
Perhaps this example may make my point clearer:
this home sold for $429,936 on 2/6/08
the zestimate is $436,500
Guess which number goes into the Zindex?
http://www.zillow.com/HomeDetails.htm?zprop=64495567
7 Joseph Ferrara.sellsius // May 12, 2008 at 10:53 am
BTW, the zestimate above was updated on 5/9/08.
8 Drew Meyers from Zillow // May 12, 2008 at 12:02 pm
Joseph-
You’re still missing the point here - in your example, the $429,936 is the biggest input to the calculation of the Zestimate of $436,500.
9 Joseph Ferrara.sellsius // May 12, 2008 at 12:26 pm
I think you miss my point Drew.
$436,500 is a different data point than $429,939.
I say the actual sales data point is more valuable than the zestimate. Do you disagree?
Realize too that my example had the benefit of a recent sale to measure against the zestimate. For homes where no recent sale has occurred we have only a zestimate , a starting point, of unknown error, as a data point.
10 Joseph Ferrara.sellsius // May 12, 2008 at 12:27 pm
Just curious: What was the zestimate on this home before the sale?
11 David G from Zillow.com // May 12, 2008 at 3:02 pm
Joe -
You are wrong.
Both the sales transaction and the Zestimate value that you’ve listed above are used in Zillow’s home value reports.
Would you please correct your blog post?
12 Dru Bloomfield // May 12, 2008 at 3:28 pm
David & Joseph, I am overwhelmed by the conversation that is occuring here. My intention was to focus on the need to using the latest and most accurate data for estimating the selling or market value of a home for purchase.
At this point, I’m turning off the comments on this post, since the conversation takes away from the original point that I was trying to make.