Is Zillow Accurate in Areas Like Dallas-FT Worth?

Question

Hello BP!  I understand that Zillow's algorithms use information from areas that may over-extend the boundaries of the primary area of sale to come up with an estimated sales price. So, Im sure it can be off.  But... In highly populated areas, with lots of sales in that zip or part of town such as... lets say, Ft Worth (picking on the DFW for those who have knowledge of the area)... can it be CLOSE to accurate on home prices?

John Chapman · Answer

@Mark Creason undefined is absolutely correct.  Simply put, the answer is no, you cannot rely on Zillow for valuations in DFW.  It's not much more accurate than the county tax appraisal records.  Only way I know of to correctly comp a house in our area is to apply appraisal standards/principles to the data from the MLS.

Jay Thompson · Answer

Correct. "Non-disclosure state" refers to those states that don't publicly disclose past sales data. The MLS is, in effect, a "private" database, where such info can be (and is) posted.

Mark Creason · Answer

Michael,

I would say if you used Zillow or any other internet source for your valuation, you will quickly be out of the investment game.  The key is to know the local market where you plan to invest.  Know what a fixer is selling for compared to a remodeled house.  Zillow is a lazy man's tool looking for an easy solution to a difficult question.

Mark

Bill Gulley · Answer

Michael, my feeling is that any valuation system that must only rely on subjective data can not be accurate in any area to the extent that it may be relied upon for investing purposes.

If you were to appraise a property anywhere, then check some other source like Zillow and they were exactly the same, you'd need to test the probability of that happening again over many other samples before there would be and degree of certainty to bet my (or your) money on.

RE valuations are not just arrived at by subjective analysis as there are objective functions or implications that effect value.

Picture a large neighborhood, say in about a 100 acre area. You can have the identical house (close, but not really identical) in the second block from the entrance to that subdivision and it may be valued at $300K, you can go 6 blocks further and the other may be valued at 10% less simply due to interior condition. Now, in that evaluation, put that second home directly behind a small commercial strip center with a 6' privacy fence. That home may be valued at 10 or 15% less due to "external obsolescence" external matters to a subject property that effect its value. So, if you try to take that $300K home and skip the valuation process you can be $70,000+ off. That's 10% off for condition and then 15% lower due to external obsolescence.

That is close enough for Harry Homeowner to estimate his net worth, or to list his home on Craig's List or to shop for insurance, but it's not close enough to for a prudent  investment decision.

There is no technological way to make property valuations easier beyond a calculator.

I suggest everyone uses the same valuation process used by lenders since you need to be on the same page in valuations since that is where the money will be coming from. Use some other valuation and you probably won't be close enough on most of your deals. :)

Jay Thompson · Answer

Jay T from Zillow here. The Zestimate is quite accurate in some places, and not terribly accurate in others. It's really more a function of available public data rather than size of the market.

Since Texas is a "non-disclosure state" the accuracy of the Zestimate suffers somewhat.

We publish accuracy data down to the county level here:

http://www.zillow.com/zestimate/#acc

Just click on "states/counties" in the accuracy table, then click on a state to get the county-level data.

Michael Petrovich · Answer

Thanks for the great example and info, Bill G.!  I'll use your advice going forward.

Michael Petrovich · Answer

Gotcha! makes sense. thanks Jay! This aspect - "non-disclosure state" - would not filter over to the MLS because Realtors collect and enter this info into the MLS database - do i understand this correctly?

Is Zillow Accurate in Areas Like Dallas-FT Worth?

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