Rental Property Investor · Member since 2018 · 11 posts · 4 votes
Hello all!
So I’m continuing my real estate endeavors by constantly looking for potential great deals in my free time using many different platforms to include apps such as Zillow.
I see that Zillow always has a “zestimate” or estimate on how much it thinks the value of the property is really worth. My question is, generally speaking how accurate do you think this is?
I don’t think I would EVER truly trust an app estimate over a subject matter expert such as an appraiser or the like. Nevertheless, I am curious what the Bigger Pockets Community has to say.
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
Hi Tyler,
I would not rely on the online estimates. Most of them are incorrect. Value of a house is not determined by an algorithm. Cannot just lump all the homes together and base it on ppsft lot size etc. There must be a human element involved. A math formula does not know what the interior quality is, does not know the layout, does not know if there are train tracks or a busy street next to the house.
For example, a big mistake I always see is someone comparing the ppsft of a 1300sqft house to a 2000sqft. A smaller house will always have a higher cost than a bigger. Gotta compare apples to apples. Determining value is the most crucial step in buying an investment. Its part art and part science. Master this and it will make you thousands and save you thousands.
Contractor · Member since 2018 · 10 posts · 6 votes
7y
@Tyler Emerson
The zestimate in my area seems to be way high most of the time. I usually like trusting Redfin more than Zillow.
I had my house appraised a couple years ago and the zestimate was about 65% higher than the appraised value. And this was after a complete rehab inside and out. I’m not talking about a paint and carpet rehab, I’m talking insulation, drywall, electrical, plumbing, electrical, new roof and sheeting type rehab....
Investor · Austin, TX · Member since 2018 · 27 posts · 59 votes
7y
@Tyler Emerson Zillow is a great tool the zestimates can pretty far off when determining the value of a property. If you dont have access to the mls you can use zillow and filter the recently sold houses that are in the area near your subject property. from there you will find 3 good comparable houses and average them out to determine what the arv is for the subject property. After that you will subtract estimated repair costs that number you have there should be close to the value of the property you are analyzing
Rental Property Investor · Member since 2018 · 11 posts · 4 votes
7y
@Michael Vincent
I’ll have to look more into Redfin, thanks for the info. The only issue is for me, looking at the app, is that it only shows some of the bigger cities around me.
Rental Property Investor · Member since 2018 · 11 posts · 4 votes
7y
@Jacob McAllister
True, finding the average comp prices is always an easy way to get a good idea of what I could expect to see for after repair values. I was curious like I said, there are several foreclosure and older model homes around me that I’ve been looking to invest in and give facelifts for buy and hold mainly.
Rental Property Investor · Member since 2018 · 11 posts · 4 votes
7y
@Jacob McAllister
True, finding the average comp prices is always an easy way to get a good idea of what I could expect to see for after repair values. I was curious like I said, there are several foreclosure and older model homes around me that I’ve been looking to invest in and give facelifts for buy and hold mainly.
Real Estate Agent · Clearwater, FL · Member since 2017 · 99 posts · 66 votes
7y
@Tyler Emerson
Like gas station sushi! You can actually go into Zillow, look at the accuracy rate, for your closest metropolitan market. The Zestimate is the median number, from a broad range, that gets you close. You need to look at upgrades, ammenities, square footage, and deferred maintenance, compared to recent sales. I've seen some off by $30k on a $200k property. That's 15% of the value, I think you would want to do your homework and run a CMA through a different source.
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
Hi Tyler,
I would not rely on the online estimates. Most of them are incorrect. Value of a house is not determined by an algorithm. Cannot just lump all the homes together and base it on ppsft lot size etc. There must be a human element involved. A math formula does not know what the interior quality is, does not know the layout, does not know if there are train tracks or a busy street next to the house.
For example, a big mistake I always see is someone comparing the ppsft of a 1300sqft house to a 2000sqft. A smaller house will always have a higher cost than a bigger. Gotta compare apples to apples. Determining value is the most crucial step in buying an investment. Its part art and part science. Master this and it will make you thousands and save you thousands.
Investor · FL · Member since 2017 · 266 posts · 220 votes
7y
@Tyler Emerson
No.
Learn how to find your own comps. Zillow is user friendly and a great tool but iI wouldnt trust it to valuate a property. I would say use Realtor.com -recently sold ,filter to your property,s metrics, less than 90 days would give you a better idea.
Rental Property Investor · Redmond, WA · Member since 2018 · 44 posts · 4 votes
7y
@Tyler Emerson not all the time, do your own analysis to estimate a value of a property such as upgrades or Reno work and build on top of what is on estimates from platforms you use.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
7y
Nope. My state is a non-disclosure state, so Zillow doesn't have access to the actual sales data, it's more or less a guess. Also, my market changes weekly, if not daily, and looking at the "comps" that Zillow suggests, sometimes they are guesses at the sales price from a transaction from 18 months ago. That might as well be the ice ages. If you know nothing about RE in your market, it's a fine place to start getting an idea, but I wouldn't use Zillow for anything other than trying to find FSBOs.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Zillow doesn’t know about the guy who got stabbed three houses down last month or the next door neighbor with 7 pit bulls or the fella on the other side of the street living in a half burned out shell for a home .
Rental Property Investor · Fort Collins, CO · Member since 2015 · 128 posts · 327 votes
7y
@Tyler Emerson Zillow takes a ton of flak on BP. More than it deserves. It pioneered automated estimating, and the results are better than what we had previously. You just need to weigh the data appropriately.
I, for one, use zillow to look at every property I evaluate because it has the best map UI. I can look at recent sales and rent listings in an easy map view with mouse-overs for bed/bath/sqft. The estimates on every property are great for a quick initial birds-eye of the neighborhood. I just understand that it’s a starting point, useful for deciding “no” before investing more time.
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Tyler Emerson "Zestimates" are the bane of the real estate world. Here in the metro Boston market, their own accuracy claim is that they're within 10% of the sales price 79.3% of the time.
With a median price of $550,000, that means that they're within a $55,000 margin of error - EXCEPT for the 20.7% of instances where their error is MORE than $55,000.
That is a truly useless number.
They now say that they don't have enough info for my home, but previously had a Zestimate of $280,000. It just appraised at $450,000 as we're doing a re-fi.
Get with a good agent and have them run your comps. Zillow is worse than useless.
Rental Property Investor · Member since 2018 · 11 posts · 4 votes
7y
@Charlie MacPherson
Wow! That’s wild looking at the data. That could ruin plans one might have in obtaining a property. I’ve always seen the zestimate and just wondered if there was any real weight to the numbers it gave out, but looking at everyone’s answers and info here I think I’ll stick to continue using comparable comps and realtors!
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
7y
Some good replies here. As an appraiser, in addition to stating a computer program is only going to get you so far, I would add that all data is good data, but some data is more meaningful than other data.
What I mean by that is, Zillow and ALL other data sources are fantastic in the sense that you are actually getting some data you did not have before. Knowledge is of course key to our success. I suggest those unfamiliar with data research also search municipal records - an ocean of information is available today that was not only a few years back.
In the end, all of us must be our own appraiser. Nothing wrong with calling an appraiser too, but even then each investor must decide for themselves what a property is "worth".
Zillow and other AVM's (automated valuation models) are never going to be what the people promoting them hope them to be. Investors who intend to succeed and maximize profits need to perform an enhanced property and market appraisal in all cases, so therefore tools like Zillow ought only be relied upon for data collection, never an appraisal. When it comes to data and appraisal, more is always better, therefore Zillow is valuable data.
Last note. No two buyers are alike. Therefore, it is highly unlikely a property is worth an exact amount at any one given time. No two properties are alike. Therefore, it is subjective that a "similar" property will be a meaningful indicator of value for another property. It is imperative people understand this, the context of appraisal reliability, when considering what a property is worth and how an investor arrived at the conclusion!!! Make sense?
"I think your property is worth $117,234.96"
"I think your property is worth somewhere between $100k and $125k"
LOL. Which is more meaningful to you? Are either useful? Would it best to have both? Is one more reliable than the other? Why?
Might a property be worth more/less to an owner occupant?
Might a property be worth more/less to an out of town investor?
Might a property be worth more/less to an investor purchasing on credit?
Might a property be worth more/less to a person who seeks sweat equity?
This list can go on and on....
It is silly to say property is worth an exact amount, because it never is. Each of us need to decide what it is worth to us. Of course when a component of what property is worth to us is what it might be worth to another buyer in the future, it gets more interesting doesn't it? LOL. Has anyone ever mentioned this business comes with certain risks?
All investors are appraisers, though they might not realize it.
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
7y
For my lower end properties, Zestimates would be very good prices. So, no, Zestimates cannot be trusted as there is too much deviation in multiple situations.
Rental Property Investor · Jacksonville, Florida Area · Member since 2016 · 106 posts · 48 votes
7y
@Tyler Emerson I have found the "Zestimate" to be way off the mark most of the time.
You can pull several comps from these websites of other similar homes that have recently sold, and that will give you a better idea on the home's true value. You can also have a realtor do it for you.
Investor · Boston, MA · Member since 2018 · 61 posts · 46 votes
7y
@Tyler Emerson I’ve come to find Zillow to be the Wikipedia of real estate. Not reliable on its own, but a good place to find references.
The Zestimate itself is pretty worthless. I’ve found plenty of Zestimates that use comps from 10 or 15 years ago. Oldest I ever saw was 1997. I‘ve also found plenty that use listing price of similar homes instead of sales price.
But, Zillow has a great UI. It’s easy to find comps in the area using it. Once you’ve gotten 4 or 5 comps off of Zillow, you can google them to verify the sales price somewhere else, and create your own estimate from that.
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
AVM is avm. The CEO of Zillow sold his Seattle historical home too low and bought his newer estate too high. It does not bother him. Stock price dropped 50% suggesting his business is what investors expect. No liability if one draws a straw out of a hat. Ditto on all other sites. Realtor.com, Home.com, Redfin.com etc.
@Tyler Emerson I’ve found that you can’t rely on the estimates provided by Zillow. I was looking at a property that was listed and the zestimate was almost $100,000 over the appraised value (a recent appraisal had been done and I found the actual appraised value on the county assessors webpage). For properties I’m seriously considering purchasing, I check their most recent appraised value on the county assessors webpage. Sometimes it’s been a few years since a property has been appraised, but it gives me a better reference for the property value than the zestimates have.
Tax "appraisal"? These usually don't correlate to the real wdeal of value of the house, simply a way to determine tax value for homes in the same tax area. My tax "appraisal" is like 1/10th the value of my house.