How to price this property?

Question

Simon Campbell · Answer

Zillow can provide you with a free estimate. But how accurate is their estimate? According to Zillow’s own Zestimate data accuracy report, they have a median error rate of 6.9%. In fact, further down in their report they state that only 38.3% of the time are they within 5% of the actual sales price.  The reality is that they are 20% off the actual sales price 84.7% of the time.

In the wholesaling business, a 20% mistake in pricing is suicidal. Follow the Zestimate’s price recommendations and you could very well lose all your profit on every deal. You need to base any purchase decision on actual verified comps along with active listings from the local MLS.

Emerson Miranda · Answer

Thanks, Simon Campbell!

I'm aware of Zillow's fluctuation in prices.

Regards,

Simon Campbell · Answer

Redfin recently conducted a study of the reliability of Trulia and Zillow. Their report stated that these two sites are missing around 20% of the active listings and that it takes 7 to 9 days before a new listing is uploaded. Additionally, 36.5% of their active listings are no longer for sale.

This means that if 20% of the listings are missing, then you will be missing 20% of the sales as well. The lack of that amount of data will have an effect on the accuracy of your statistical results.

Tom Scott · Answer

@Emerson Miranda

As others have stated above, Zillow estimates are worthless. Zillow is useful for seeing what is currently listed, and seeing what has sold in the past and for how much. You can set the search features in Zillow to only show homes that have sold within the past 60 or 90 days. You can go back longer but they don't do much good that far out. Verify all data with the county website before moving too far forward. I use Zillow as my primary real estate search engine and comping tool and it works as long as you know its limitations. Someday I will get MLS access, but for now it is the best of what is out there.

Tom

Gerald Harris · Answer

what is your exit strategy?

Buy & Hold?   or Wholesale?

1.  Find out the value of the property.  Zillow can be severely off.

This site has given me some pretty good comps, within 5% of MLS comps

http://findcompsnow.com

2.  find out what other properties have sold for with that cash flow and price range

3.  If wholesaling do you have an end buyer ready to go?   if buy  and hold make sure you calculate your numbers.   Debt service, Operating costs, repairs needed etc.....  and the Cash flow.

How to price this property?

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