zillow hotpads etc How accurate are their Estimates

8 Replies

I was perusing my portfolio and 

took a peek at what zillow had them valued

I compared this with what the county had assessed as real value for tax purposes 

they were all off by 10,000   plus or minus from each other

my thought was that the county may inflate the value

but in some instances zillow was a bit higher than the county on a couple of properties

anyone else have a handle on how to read between the lines of these numbers

to get a quick guestimate. 

without getting to heavily involved with comps.

Originally posted by @Steven Maduro :

can you elaborate?  

is zillow and the others too high 

too low 

or just plus and minus incorrect. 

what is a more accurate way to determine real property value?

 They're total garbage. Those algorithmic valuations cannot detect many variables that make all the difference in the accuracy of a valuation. The results are all over the board.

Zillow has stated themselves something to the effect that their "Zestimate has an 80% accuracy if you allow for a deviation of 20%." 

So if they are saying the house is worth 100k. It could be worth 80-120k and you have an 80% chance of it being somewhere in that range. I don't know about you but I don't have that large of a margin of error. 

If you don't have a Realtor with access to MLS and can only use Zillow....

Use the similar sales tab. Sort by distance. Only use homes that have similar sqft and bedroom/bathrooms. Go no further out than half a mile. Use sales from 6 months or newer. Get 3-5 sales. Divide the sales price by the sqft. Take that $/sqft figure and multiply it out by sqft of your subject property. That will give you a rough idea of what you could reasonably expect the ARV to fetch.

Only go out in distance/Age of sale if you don't have enough comps. The further you go the larger the margin of error.

Originally posted by @Steven Maduro :

Zillow and the other websites may be useful at times for various reasons but the better question might be: 'how inaccurate are the estimates? Often this might be substantial. 

You want to have some sort of MLS based comps. If there isn't readily available MLS access (and realtors will claim to be busy), there is also the 'cost to replace' and 'income based' approach to determining value.

There are also at least 5 different sites out there similar to zillow that will also provide 'their version' of an estimate; you could use the average for further comparative analysis. The variance in values from each of these sites though on the same property may range from disturbing to frightening but they help in getting some sort of idea where the appraisal is likely to get in at.

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