Can I estimate with a "Zestimate"?

Madison, WI · Member since 2015 · 20 posts · 2 votes

Hey BP

Zillow seems like it could be a very useful tool for searching for real estate and gleaning a blind estimate for locations value and rental income.

My question is, just how accurate are these "Zestimates"? Especially in larger cities like Milwaukee, my target market.

Thanks.

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Manny Cirino

Real Estate Agent · Winter haven, FL · Member since 2011 · 572 posts · 336 votes

10y

@Jordan Hanksion I don't care what no one says visually zillow is the besting out there. if your area has a lot of sales and you filter it right. it is pretty close. But you should now how to pull comps. take as many properties that sold in the area within the last 90-180 days at retail value not reos or short sales (you can tell by the pictures if they were rehabbed). make sure they have the same amount of bed and bath, year build and sqft. sqft. should be at most 200 more or less, look at what each one sold for then average out the price per sqft. and that give you a cost.

Example: Analyzing Comps

Deal being analysed 123 main st. Lakeland FL 33810 3/2 1,200 sqft. built 1962

comp 1.) 3/2 1,400 sqft 1963 sold $120,000 price per sqft. $86

comp 2.) 3/2 1,000 sqft 1961 sold $85,000 price per sqft. $85

comp 1.) 3/2 1,252 sqft 1966 sold $110,000 price per sqft. $88

$86 + $85 + $88 = $259 / 3 = $86

$86 per sqft is your ARV so $86 x 1,200 sqft = $102,000

I also use AVM I like these more for this I use Express.RealQuest.com this is 100 times more accurate and easier.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y
Plus or minus 30%.
4 Reply
Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
10y
Hope you make more than you lose, because looking for shortcuts and gimmicks ensures you will lose money. Learn the basics of real estate which includes understanding your market and valuations of property, it's your money! :)
2 Reply
Sam Erickson
Real Estate Broker · Milwaukee, WI · Member since 2014 · 338 posts · 129 votes
10y
Zillow estimates are always off. Redfin just released their estimate tool. They boast a median error rate of just 1.6% for homes that are listed. Don't know if they are analyzing in MKE yet though. I would concur with the others though no replacement for just doing your homework and knowing your market.
1 Reply
Rob Myers
Milwaukee, WI · Member since 2014 · 180 posts · 114 votes
10y
Don't count on Zillow when analyzing properties in Milwaukee. Zestimate and city tax assessed values are two numbers on there that don't mean a thing. I will say that Zillow does have a nice function where you can see recently sold comps in the neighborhood by browsing the map. That's the extent of the Zillow data I use.
Good luck.
2 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
10y
Originally posted by @Wayne Brooks:

Plus or minus 30%.
More like 50%. Zestimate includes way to large of a range Ihigh low) in sales comps, size of home and way too large of an area to be useful. However, if you learn how to analyze markets and properties, you can use Zillow successfully by just setting up your search criteria properly, and learning how to interpret the info you get. In other words, you need to actually learn how to analyze using the many tools available, and not the shortcuts.
0 Reply
Jordan Hanksion
OP
Madison, WI · Member since 2015 · 20 posts · 2 votes
10y
@Sam Erickson Interesting! I had no idea about Redfins new service. I will certainly look into it.
@Bill Gulley I am aware that much more research is going to be required before any offers are made, this is why I referred to these as "blind estimates". If you know Milwaukee then you know that it is one of the most segregated cities in the US. one area will be gentrified with high rents and property values and another 3 blocks over will be a ghetto. The ability to have a rough estimate would help me significantly to funnel which properties are worth investigating further and which are likely duds. Very useful in a city where there are hundreds of properties that are under $50,000.
0 Reply
Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
10y
If it's your money, sure. Absolutely.
If it's someone else's money, that could be a problem.
If it's my money, never.
4 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Jordan Hanksion its not only Milwaukee its every city basically East of Denver of any size IE segregatged and one block can be great and 3 blocks over Ghetto.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
10y
Originally posted by @Wayne Brooks:

Plus or minus 30%.
I think the world of Wayne Brooks's advice, and hate to disagree with him, but he is being far too kind - maybe he's a Zillow shareholder? (Sorry, Wayne)
Plus or Minus 100%. Zestimates have been accurate, but only by accident. Even a broken clock is right twice a day...
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Bill S.Pro Member
Moderator
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
10y
@Mindy Jensen actually if the clock is stopped it's right twice a day. A broken (but moving clock) can always be wrong. Zestimates fall in that for me. If 4 blocks makes a difference, then I find it hard to believe any nationwide "tool" is going to be useful.
1 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
10y
@Bill S., I meant a stopped clock. Yeah, perfect analogy... I really want it to be accurate...
I have a retail client, and they were asking me why the Zestimate says X about this property when it's listed at Y. Sigh...
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0 Reply
Mark Creason
Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
10y
Jordan,
I have some property for you in the Dallas market. Zillow rates it highly. Let me know if you are interested.
Mark
1 Reply
Matt R.
Blue Springs, MO · Member since 2015 · 481 posts · 313 votes
10y
Just to pile on a little...
Where I live, in a suburb of Kansas City, MO, one of the local realtors sends out a flyer once a month to drum up business. One of the things that's always on it is "In the last year, X homes have sold in your subdivision! The highest sale price was $Y and the average price of those X homes was $Z!" They say they pull this data from the MLS, and I don't have any reason to doubt them. I usually take out the high sale and re-do the average price for X-1 houses, just for kicks.
Based on that data, and me looking at a couple of houses in my neighborhood that are currently listed on Zillow, I think the Zestimate values are roughly 10% to 25% higher than reality. These are for houses built roughly 1965-1975, 1300-1500 sq ft, 3 br, 1, 1.5, or 2 bath, 2-car garage, that go for roughly $100k-$110k retail, plus or minus.
0 Reply
Tom V.
San Francisco, CA · Member since 2014 · 345 posts · 281 votes
10y
So many cranks on the comment boards these days
I have found zillow estimates a useful starting point for further research. Even dumber than relying on the estimates totally would be to ignore them entirely.
Keep learning and have fun.
2 Reply
Dmitri L.
Investor · DFW, TX · Member since 2013 · 319 posts · 101 votes
10y
Originally posted by @Jordan Hanksion:

Hey BP
Zillow seems like it could be a very useful tool for searching for real estate and gleaning a blind estimate for locations value and rental income.
My question is, just how accurate are these "Zestimates"? Especially in larger cities like Milwaukee, my target market.
Thanks.
You said it perfectly yourself - a blind estimate. Also known as a shot in the dark. Good luck!
-D
0 Reply
Matt M.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
10y
PSA - Zillow is just a lead generation company that sells your information to RE agents and lenders so they can get your business. It should NEVER be used to make investment decisions.
0 Reply
Johnathan Alesso
Investor · San Diego, CA · Member since 2015 · 111 posts · 34 votes
10y
I find that Zillow is off-base for low-end properties that need to be rehabbed.
0 Reply
Mark Nelson
Wholesaler, Investor · Portland, OR · Member since 2015 · 117 posts · 38 votes
10y
As far as pricing goes I like to use the Zestimate as a first glance to see if it is a deal. If someone sends me a property and says it costs X amount I will pull up the address on zillow and look at the Zestimate. The difference between those two amounts will determine how much more research I am willing to do for this deal.
1 Reply
Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
10y
Those types of sites have no real value. They don't take into account location, neighborhoods, quality of construction, size of lots, HOAs, Mello Roos, and a host of other issues that are actually relevant to values.
2 Reply
Jordan Hanksion
OP
Madison, WI · Member since 2015 · 20 posts · 2 votes
10y
@Mark Nelson That seems like good advice. My foremost plan for Zillow is to use it as a platform to find properties where further investigation might be worth pursuing.
It just so happens that I plan on expanding my market to Portland, OR in the next few years. How do you find the market is for deals there? It definitely seems like a tighter scene there than in the Midwest, from the research I've done.
0 Reply
Wayne Olson
Real Estate Broker · Portland, OR · Member since 2015 · 35 posts · 10 votes
10y
Zillow publishes their error rates here. They don't publish for your target market, but this should give you a solid idea just how (in)accurate they are.
2 Reply
Mark Nelson
Wholesaler, Investor · Portland, OR · Member since 2015 · 117 posts · 38 votes
10y
@Jordan Hanksion Much tighter in Portland than the Midwest. Their are deals they are just harder to come by and you have more competition.
0 Reply
Manny Cirino
Real Estate Agent · Winter haven, FL · Member since 2011 · 572 posts · 336 votes
10y
@Jordan Hanksion I don't care what no one says visually zillow is the besting out there. if your area has a lot of sales and you filter it right. it is pretty close. But you should now how to pull comps. take as many properties that sold in the area within the last 90-180 days at retail value not reos or short sales (you can tell by the pictures if they were rehabbed). make sure they have the same amount of bed and bath, year build and sqft. sqft. should be at most 200 more or less, look at what each one sold for then average out the price per sqft. and that give you a cost.
Example: Analyzing Comps
Deal being analysed 123 main st. Lakeland FL 33810 3/2 1,200 sqft. built 1962
comp 1.) 3/2 1,400 sqft 1963 sold $120,000 price per sqft. $86
comp 2.) 3/2 1,000 sqft 1961 sold $85,000 price per sqft. $85
comp 1.) 3/2 1,252 sqft 1966 sold $110,000 price per sqft. $88
$86 + $85 + $88 = $259 / 3 = $86
$86 per sqft is your ARV so $86 x 1,200 sqft = $102,000
I also use AVM I like these more for this I use Express.RealQuest.com this is 100 times more accurate and easier.
5 Reply
Larry Turowski
Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
10y
Zillow is useful for recently solds as another has said. That doesn't tell the whole story. They could be cash deal, seller concessions, seller financing, etc. But is is very useful.
As for Zestimate, I'd say if I knew nothing else about a city it could tell me the trends in neighborhoods--this one is higher than that one, etc. But recently solds should do that for you more accurately.
0 Reply
Anthony Yannucci
Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
10y
Originally posted by @Manny Cirino:

@Jordan Hanksion I don't care what no one says visually zillow is the besting out there. if your area has a lot of sales and you filter it right. it is pretty close. But you should now how to pull comps. take as many properties that sold in the area within the last 90-180 days at retail value not reos or short sales (you can tell by the pictures if they were rehabbed). make sure they have the same amount of bed and bath, year build and sqft. sqft. should be at most 200 more or less, look at what each one sold for then average out the price per sqft. and that give you a cost.
Example: Analyzing Comps
Deal being analysed 123 main st. Lakeland FL 33810 3/2 1,200 sqft. built 1962
comp 1.) 3/2 1,400 sqft 1963 sold $120,000 price per sqft. $86
comp 2.) 3/2 1,000 sqft 1961 sold $85,000 price per sqft. $85
comp 1.) 3/2 1,252 sqft 1966 sold $110,000 price per sqft. $88
$86 + $85 + $88 = $259 / 3 = $86
$86 per sqft is your ARV so $86 x 1,200 sqft = $102,000
I also use AVM I like these more for this I use Express.RealQuest.com this is 100 times more accurate and easier.
Thanks for this formula!! I like it! Thanks!
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