Updated over 6 years ago on . Most recent reply
Dave MeyerPoster
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- Head of Real Estate Investing at BiggerPockets
- Seattle, WA
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What Data Is The Most Valuable?
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Most Popular Reply
Done - and a note of caution on comps.
Without deep local knowledge, it's not possible to deliver anything better than the random dart throw of Zillow - and those are often so far off as to be laughable.
In the Boston area with an average sale price of $765K, being within 20% of the true market value 79.3% of the time means that the predicted error is $153,000 or less, except for 20.7% of the time where the error will be MORE than $153,000. Not only is that a useless number, it's dangerous when people rely on it.
This is something that we Realtors have to struggle to overcome. We talk with sellers who have an inflated view of their home's value because "the Zestimate said $XXX,XXX", but we know it's not. Investors who rely on these numbers can get hurt too.
I still run comps manually. It takes me 30-60 minutes to do them, but when I tell a seller what their home will sell for, I'm almost always well within 5% of the actual sale price.
The bottom line on comps is that no data is better than bad data.
Without deep local knowledge, it's not possible to deliver anything better than the random dart throw of Zillow - and those are often so far off as to be laughable.
In the Boston area with an average sale price of $765K, being within 20% of the true market value 79.3% of the time means that the predicted error is $153,000 or less, except for 20.7% of the time where the error will be MORE than $153,000. Not only is that a useless number, it's dangerous when people rely on it.
This is something that we Realtors have to struggle to overcome. We talk with sellers who have an inflated view of their home's value because "the Zestimate said $XXX,XXX", but we know it's not. Investors who rely on these numbers can get hurt too.
I still run comps manually. It takes me 30-60 minutes to do them, but when I tell a seller what their home will sell for, I'm almost always well within 5% of the actual sale price.
The bottom line on comps is that no data is better than bad data.