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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Anthony Yannucci
Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
10y
How does anyone feel about www.eppraisal.com??
0 Reply
Adrian Smude
Rental Property Investor · Plant City, FL · Member since 2015 · 1k+ posts · 379 votes
10y
I look for comps myself with recent sold, but I also take an average of most of the sites that give estimates. They are actually pretty close a lot of the time. (I go with the lowest number because I'm conservative)
1 Reply
Manny Cirino
Real Estate Agent · Winter haven, FL · Member since 2011 · 572 posts · 336 votes
10y
@Anthony Yannucci i definitely do not use eppraisal.com its to generic. Since Zillow acquired truly they have become better. Eppraisal.com findcompsnow.com etc... they are scattered alot of the times.
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Anthony Yannucci
Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
10y
Originally posted by @Adrian Smude:

I look for comps myself with recent sold, but I also take an average of most of the sites that give estimates. They are actually pretty close a lot of the time. (I go with the lowest number because I'm conservative)
Any good site to get those comps?
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Adrian Smude
Rental Property Investor · Plant City, FL · Member since 2015 · 1k+ posts · 379 votes
10y
@Anthony Yannucci I think @Manny Cirino has great advice. If you read into what he's saying, I believe you need to find the sites that work best for you area. This could be none, but most importantly you need to do your own comps and use these sites as a preliminary analysis on a property. Just like the 50% and 1% rules.
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Chris Schwamberger
Military Aviator · San Diego, CA · Member since 2015 · 4 posts · 2 votes
10y
I agree with Karen.
In my experience, Zillow is pretty good about analyzing market trends for a big picture of the local market, but their values are usually off. I have also noticed that Zillow tends to fluctuate on a week-by-week, even a day-by-day basis, especially in smaller/towns where it will take one or two sales and throws off their formulas.
If you need a snapshot of the current market - Zillow is a good place.
If you need a no kidding home value - you need to go somewhere else.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
10y
What is it about the market, income and replacement approaches that investors find so difficult?
At some point, properties owned will be subject to these standard approaches to value, why not use them instead of trying to modify simplicity just because either 1. they aren't understood or 2. someone is too lazy to do the work?
A house across the street can be in a different subdivision and that can mean thousands of dollars.
To say an approach of weighted averages per sq ft is going to be accurate is really saying you're lucky a lot. Size doesn't rule value, condition, quality, amenities, location and functionality do.
Careful assessments from any MLS can give you better valuations than any service out there that uses a block assessment approach. :)
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Franklin Romine
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
10y
Zillow is wonderful when you are selling a house below the zestimate...

Frank
1 Reply
Dante Pirouz
Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes
10y
I use Zillow's rent estimates as a conservative baseline when trying to figure out what to charge for my rental properties. My properties always seem to get more than the Zillow estimates but I can use a percentage increase above the Zillow estimate to figure out what to ask for. I find in my area the Zillow rent estimate is much better than the other rent estimating tools out there. That said I don't put too much value in the Zestimate for property values...recently sold prices are more useful but not the complete picture of course. One of my properties jumped from a Zestimate of $60K to $160K in one month and I know it would actually, realistically sell for about $100K - $110K so go figure!
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Victor Saumarez
Investor · Lahaina, HI · Member since 2012 · 47 posts · 35 votes
10y
Redfin was always the place to go. It was way out there ahead of its competitors. They used to have a CMA (comparative market analysis) guide that spelt out how to do your own analysis. But that and their house price guide seems to have changed. You can get an idea by just looking at similar houses in the neighborhood that sold within the last six months, and then ask your agent for comps. Realtors don't like these online tools because they can give a distorted idea of prices upon which buyers and sellers then base false expectations. Having said that, when you consider Zillow, Trulia, and Redfin don't charge you to use their websites, you can't complain.
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Chris DawsonPro Member
Real Estate Broker / General Contractor / Property Manager · Kansas City, MO · Member since 2010 · 395 posts · 425 votes
10y
@Jordan Hanksion, Zillow is crap! In addition to everything mentioned already in this post, Zillow does not verify any data that it receives. Anybody can post their house for sale on the site and you can post whatever sale price you want. They don't check the county records to verify sales comps. The only reason zillow is even remotely close on their estimates is because they pull in MLS feeds.
Do yourself a favor and find a good, investor real estate agent and pay him/her to do your property evaluations.
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Mike Hill
Investor · Boca Raton, FL · Member since 2014 · 103 posts · 39 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.
As usual, my opinion seems to divert from that of the majority.... Before I give my 2 cents however, I need a soapbox moment :) I think there is an innate tendency (myself included at times), to "bash" ideas and thoughts that we don't agree with, perhaps unintentionally, but nonetheless haphazardly and often in an exaggerated manner in an attempt to demonstrate our greater knowledge. Taken to an extreme, it yields comments like - "xyz is a terrible resource or wrong 100% of the time." It's a polarizing effect that ultimately isn't very helpful. When answering in such a manner, it can often be discouraging to those who come here seeking advice; almost an admonishment for asking the "dumb question." It's really not TOO bad in these comments, (I've seen worse on the forum), but could easily take that turn - so just a word of caution for anyone who cares - it's the total opposite of what a great resource BiggerPockets can be, and what it's really here for.
Therefore, Jordan, thanks for your question. As I see it, you've asked two things. 1. Can zillow be a useful tool for searching for real estate info - to which my answer is yes. and 2. Is the Zestimate accurate, to which my response would be No.
In order to further assist, it would also be helpful to ask you, what your goals are, and how you plan to use the information.
As a wholesaler, I look at hundreds of potential properties each week. I cannot, and do not, pull Sitex reports, analyze subdivisions, look at the property appraiser site, or run comparables for MOST of these properties initially. I value my time greatly and this would be a huge waste. Often times, I may glance at zillow, as an initial source just to get a general idea of where I stand. Also, as a tip, rather than use the zestimate, scroll down a bit further and look at the "recent similar sales" for a slightly better idea (these are actual sales after all and do have some value). If I'm speaking to a seller for example, and they are asking for $300k and I'm in my car, I'll glance at the recently sold properties and if they are all in the $250k range, I can determine the seller is probably not that motivated, and will just move on quickly. Is it an imperfect system? absolutely... but in the long term, I find it works for mel.
As a rehabber, you could never use this info for a proper estimate, but lets say you get wholesale deals from 5 wholesalers, where each has 10 properties for sale (50 total). Knowing that the top houses may sell within an hour or two, it might prove useful to do some initial HW on zilliow within say, 5 minutes, to determine which properties are worth doing a Real analysis on and you can do it in a short enough time frame that you still have a shot at grabbing a good one for yourself.
Good luck and again thanks for the contribution, I'm making an effort to being more active on BP myself as it was a great resource for me to learn, and I'd like to make 2016 a year to reciprocate.
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
10y
I agree with Mike. As a wholesaler, I too use it to gauge the seller's motivation on the initial call. If you're getting a heavy volume of calls, Zillow solds is a great tool to quickly evaluate a property on the initial call.
I use Zillow for the initial call and if we are in the same ballpark range to proceed with seeing the property, then I will pull MLS comps for the appointment.
Captain Save-A-Home LLC
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
10y
On a side note, I like Zillow solds too because you can also build a buyer's list off it.
Captain Save-A-Home LLC
Website View Page
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Jordan Hanksion
OP
Madison, WI · Member since 2015 · 20 posts · 2 votes
10y
@Mike Hill I appreciate your detailed and well thought out response. I would tend to agree that on many forum posts there tends to be a number of, may I say, overzealous responses. However, to say that this has in any way discouraged me from diving in and continuing my real estate education would be far from the truth indeed.
To answer your question: my real estate goal, long term, is primarily to buy and hold. The strategy I intend to use to achieve this goal in the next 1-2 years is to first house hack a multi-unit (likely a 3 or 4 plex). After the first purchase I intend to take advantage of the stellar market prices in Milwaukee to purchase an incredible deal (hopefully, at or below the 50K range).
Now here is the rub, the first property I will be purchasing will be in my primary city, Madison, WI. I know Madison very well. I have friends there, many who are in real estate. I have a solid knowledge of the neighborhoods and decent of the market value of the real estate there. I don't, however, have such intimate knowledge of Milwaukee, and while they are manageably close to one another (1.5 hour drive), I need help when searching for deals in that area.
My primary worry has been, "Is this property a great deal because it's so cheap, or is this property so cheap because it is a horrible deal?". Another concern of mine is the neighborhood of properties I'm investing in. Milwaukee has some notoriously bad neighborhoods and, unfortunately, a lot of them . Not being a Milwaukee local it is difficult to pinpoint where these bad neighborhoods end and the good ones begin. There is not a whole lot of statistical data telling me how to find these neighborhoods, or more accurately, I don't know where to find these data sources, or how to interpret them.
The end result of this "market blindness" is that I have a wide city of properties for sale, mostly on the MLS, but not a whole lot of knowledge about where to look, the market values specific to an area or, most importantly, what a good deal looks like for that particular neighborhood.
I know this is rather long winded, Mike, and I appreciate you sticking it through. Let me know if you were curious about anything else.
Much appreciated!
Jordan
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
10y
I think the Trulia map is pretty accurate for Milwaukee. The greener the better.
Captain Save-A-Home LLC
Website View Page
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Judy Parker
Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
10y
Zillow takes legitimate listings from local Realtor's MLS sites and uploads these listings to Zillow's site. However, Zillow fails to update the listings. Their Zestimates are unreliable.
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Aishah Amina
Richmond, VA · Member since 2015 · 41 posts · 4 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.
That was very helpful! How do you equate what seems to be the standard 67%. ARVx.67-repairs = offer. How do you explain that to the seller?
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Kevin Kurt
Waunakee, WI · Member since 2015 · 63 posts · 28 votes
10y
Like most tools it can be helpful if used the correct way, and dangerous if used incorrectly. I use it as a filter, and a quick way to find comps. It helps me to eliminate some properties and can stoke my interest in others. I am still pretty new, so when it comes time to buy a property I will work with a realtor.
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