Explaining to New Investors Why "Comps" From Trulia & Zillow are Not Reliable

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Explaining to New Investors Why "Comps" From Trulia & Zillow are Not Reliable

Samantha M.
Landlord · Dallas, TX · Member since 2012 · 505 posts · 34 votes

As the topic states, sometimes when I speak with individuals new to real estate they will often site Trulia and or zillow to pull comps.

Thats not for a general estimate mind you, but for actual comps for the subject property.

How do you explain that such sources are less reliable than the MLS? To my knowledge, trulia/zillow use some sort of algorithm that aggregates prices. In other words, its decent for a "ball park estimate" but for specific comps its no good.

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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
14y

Zillow's Zestimate is not reliable but they do have actual sale prices from tax records. While not very detailed these are legitimate comps. - Ned

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  • Vanessa Brown
    Contractor · Washington, Washington D.C. · Member since 2011 · 29 posts · 9 votes
    14y

    Tell them exactly that. Also you can throw in the delay factor. The data fed into the algorithm is based on public record. In my area it can be 6-9 months before a deed (and it's sale price) is recorded. The MLS info is entered within a day or two of closing. So not only are they using a program but it's making it's calculations based on time delayed info.

    0Reply
  • Kevin Kaczmarek
    Real Estate Investor · Fishers, IN · Member since 2009 · 408 posts · 196 votes
    14y

    I would pull recent comps and compare them together against the crazy numbers that either of those sites operate. Remind them that those sites use estimates based on an algorithm, and you are showing them hard facts that is easily accessible from public records to verify.

    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    14y

    Zillow's Zestimate is not reliable but they do have actual sale prices from tax records. While not very detailed these are legitimate comps. - Ned

    5Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    14y

    They need to understand a generic estimate cannot adjust for problems or inaccuracies that a real appraiser would note.

    How could Zillow ever know the difference between an extravagantly updated or a really "hammered" interior?

    0Reply
  • Tod R.
    Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    14y

    To confirm, do Zillow and Trulia get their sales info from public records and not MLS?

    If that is true, then they cannot get accurate data in Texas. The only records where actual sales prices are recorded in Tx are in the MLS.

    0Reply
  • Robert R.
    Multi-family Investor · New York City, NY · Member since 2012 · 30 posts · 6 votes
    14y

    http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

    They do a pretty good job of explaining their numbers if you do some digging on their site. It is location specific though, as not all numbers (sq ft, bd/br, lot size, year built, etc is reported. They even state that it is NOT an appraisal.

    0Reply
  • Michael Lauther
    Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
    14y

    I use zillow and Trulia to view actual recent sales but their estimates are screwy.

    I have three houses all next to each other and 2 are mirror images of each other. the two bedroom 1 bath has been estimated at 34,700 and the mirror image one house away in better condition is 23,300 : the three bedroom 1 bath in better condition than the other two is 23,500.

    These numbers do not make sense so trying to use them will just confuse the issue for instance, there is a property diagonally across the street with a "zestimate" of 42,100 (I only wish) , while my 3 bedroom 1 bath with central air in great shape with more square feet on the same side of the street one block away is estimated at 24,900.

    I think they are just making these numbers up. A monkey with some darts and a board would be more consistent.

    0Reply
  • Kevin Kaczmarek
    Real Estate Investor · Fishers, IN · Member since 2009 · 408 posts · 196 votes
    14y

    we also have found that the accuracy of zillow and realtor.com are so location specific that if you are not prepared with quality accurate, 3rd party data to support your price reasoning, you will lose the deal.
    We recently sold a property to a California investor who pulled comps from zillow and realtor.com and wanted to back out of the deal when they thought the property was being sold for $5,000 above the highest comp, when in actuality, the property was being sold at $15,000 below the lowest comp. If we didn't get that chance to present the data, we would have lost the client and the deal.

    0Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Samantha M.:
    As the topic states, sometimes when I speak with individuals new to real estate they will often site Trulia and or zillow to pull comps.

    Thats not for a general estimate mind you, but for actual comps for the subject property.

    How do you explain that such sources are less reliable than the MLS? To my knowledge, trulia/zillow use some sort of algorithm that aggregates prices. In other words, its decent for a "ball park estimate" but for specific comps its no good.

    You could let them know that guys like me are out there. I've edited my "home facts" to crank the "zestimate" up. 9 bedrooms, 9 bathrooms, and a 50,000 square foot lot. When one of those properties is listed for sale, the "home facts" from the mls are used, and zillow's estimate isn't revised. So my zesstimate is always much higher than my list price, and while the listing is active, a buyer can't see that I doctored the zestimate.

    Garbage in, garbage out... ;-)

    I figure it's ethical for me to do that, since their estimate is slandering the value of my property.

    Zillow is a toy, play with it!

    0Reply
  • Phillip Dwyer
    Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
    14y

    Mark H: Really? I hope you're joking.

    0Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Phillip Dwyer:
    Mark H: Really? I hope you're joking.

    I wish I was.

    Zillow is a for-profit enterprise that knowingly publishes incorrect information.

    The point of this thread is that a portion of the buying public actually believes their "Zesstimates", and tries to negotiate based on them.

    Zillow doesn't have any "right" to disparage the value of my property, or yours - in fact, they would be the first to tell you how worthless and inaccurate they are, if you tried to sue them for the damages they cause.

    Putting a finger on the scale just evens the playing field.

    1Reply
  • Ann Bellamy
    Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
    14y

    I don 't think Zillow's publishing of inaccurate information justifies your intentional misinformation.

    Using that logic, we'd all be thieves and murders, because if someone else is doing it, we might as well do it too.

    1Reply
  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    14y
    Originally posted by Mark H.:
    Originally posted by Samantha M.:
    As the topic states, sometimes when I speak with individuals new to real estate they will often site Trulia and or zillow to pull comps.

    Thats not for a general estimate mind you, but for actual comps for the subject property.

    How do you explain that such sources are less reliable than the MLS? To my knowledge, trulia/zillow use some sort of algorithm that aggregates prices. In other words, its decent for a "ball park estimate" but for specific comps its no good.

    You could let them know that guys like me are out there. I've edited my "home facts" to crank the "zestimate" up. 9 bedrooms, 9 bathrooms, and a 50,000 square foot lot. When one of those properties is listed for sale, the "home facts" from the mls are used, and zillow's estimate isn't revised. So my zesstimate is always much higher than my list price, and while the listing is active, a buyer can't see that I doctored the zestimate.

    Garbage in, garbage out... ;-)

    I figure it's ethical for me to do that, since their estimate is slandering the value of my property.

    Zillow is a toy, play with it!

    You actually spend your valuable time editing data on Zillow? I would think that most people, especially real estate investors could find something else to do that help grow their business.

    I am not defending Zillow either, I do not use their "service", which I believe to be a better protest because they will not get "hits" to their site like you give them.

    0Reply
  • Account Closed
    SFR Investor · WY · Member since 2011 · 115 posts · 15 votes
    14y

    I use Zillow for the solds, and consider the estimates to be fairy tales. Same thing for Rentometer, and any other site where the user can actually enter data to help figure the 'comps'.

    I use a local realtor site when I want more detail about the solds, as the local realtor leaves photos, square footage, age, et cetera up longer.

    0Reply
  • Account Closed
    Wholesaler · Chicago, IL · Member since 2011 · 219 posts · 38 votes
    14y

    All you need to tell them is to find a local realtor that will provide you with comps and work with them. In return, you can refer to them any short sale leads you come across. Those other sites can just be used as backup estimates.

    0Reply
  • Scott Pirrie
    Investor · Seattle, WA · Member since 2010 · 63 posts · 8 votes
    14y

    At least in the Seattle area Zillow's comps are very accurate but, Zillow was founded and headquartered here. The majority of the time I pull the same comps as found on the MLS here.

    I don't use the Zestimate it's garbage. In Texas as mentioned before you can't use it, it's very market specific and dependent on public record accuracy.

    0Reply
  • Samantha M.
    OP
    Landlord · Dallas, TX · Member since 2012 · 505 posts · 34 votes
    14y
    Originally posted by Scott Pirrie:
    At least in the Seattle area Zillow's comps are very accurate but, Zillow was founded and headquartered here. The majority of the time I pull the same comps as found on the MLS here.

    I don't use the Zestimate it's garbage. In Texas as mentioned before you can't use it, it's very market specific and dependent on public record accuracy.

    What about Texas public record accuracy makes zillow comps poor in Texas?

    0Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Ann Bellamy:
    I don 't think Zillow's publishing of inaccurate information justifies your intentional misinformation.

    Using that logic, we'd all be thieves and murders, because if someone else is doing it, we might as well do it too.

    That's quite a comparison, but how about if we flip it the other way?

    Let's preface this by stating that any house I sell or offer for rent is the best on the block. My houses are cleaner, fresher & better maintained than the competition, which effectively makes *every* AVM inaccurate, they're always too low.

    What right does an outside for-profit company have to tell potential buyers/renters that my property is "overpriced"?

    Should I be forced to deal with lowball offers based on inferior & inaccurate "comps"?

    If Zillow were to claim in writing that they were "accurate", I might be able to sue them for causing me financial damage, or at least get them to allow me to "opt out".

    I can go after an appraiser's license if they hack an appraisal, who can I turn to when Zillow costs me money unfairly?

    Zillow is operating on the fringe of the law - with just enough "credibility" amongst the public to cause financial damage, but dodging responsibility for accuracy.

    And they're making a profit in the process by selling ads & leads based on those inaccurate zesstimates.

    Zillow *caters* to that percentage of the population that doesn't trust agents, so there is *no* counterbalancing force to say that , "Yes, that house went for $xx, but it smelled like cat piss, and someone stole the copper out of it!".

    By catering to those that don't trust agents, and don't have access to "real" comps, Zillow is telling that segment of the market exactly what *they* want to hear - you can buy a "perfect" house, for the same price as a dump.

    Borking a zesstimate just keeps zillow from running off potential customers that really might *like* my property, even if it costs more than the dump down the street. If my property is overpriced, it won't *ever* sell or rent, no matter what I do to the Zesstimate.

    1Reply
  • Eduardo A.
    Sandy Springs, GA · Member since 2011 · 126 posts · 31 votes
    14y

    I use Zillow, Listingbook, & Trulia to look at recent sales, I wouldn't use their estimates at all.

    0Reply
  • Shane Woods
    Real Estate Agent · Weatherford, TX · Member since 2011 · 726 posts · 284 votes
    14y
    Originally posted by Samantha M.:

    What about Texas public record accuracy makes zillow comps poor in Texas?


    Hey Samantha M., the reason Public records do absolutely NOTHING for you in the way of sales data, is because Texas is a "non-disclosure" state. This means that sales price is not on any public record, as stated above. The ONLY place to find actual sales price is on the MLS.
    1Reply
  • Phillip Dwyer
    Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
    14y

    Mark H:
    It sounds like you need a refresher on ethics. You may also want to check with your state on what they require of a licensed agent when advertising a property. If you're a Realtor, you better read through their policies as well.

    Samantha sorry for stealing the thread. One way to prove/disprove data from zillow is to validate it against public records and call the parties to the transaction.

    0Reply
  • Nick J.
    Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
    14y

    Flame me all you want but I'm with Mark H. on this one.

    Not just because its funny, well, a lot to do with its funny but also, I agree with his reasoning. Sorry if I just rustled some jimmies but it is what it is.

    Pile or cow dung > Zillow

    1Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Phillip Dwyer:
    Mark H:
    It sounds like you need a refresher on ethics. You may also want to check with your state on what they require of a licensed agent when advertising a property. If you're a Realtor, you better read through their policies as well.

    Samantha sorry for stealing the thread. One way to prove/disprove data from zillow is to validate it against public records and call the parties to the transaction.

    @Phillip Dwyer
    I think those are pretty strong words considering the facts. Zillow isn't my client, they are a for-profit company that has inserted *themselves* into my business, without my consent or approval. They aren't "impartial", there is no "appeal process", and whenever someone starts talking about being damaged by them, they rally around the fact that a "zesstimate" is not an appraisal, it's just a novelty provided at no charge, worth exactly what the buyer paid for it.

    If you do a quick googling, you'll see that my state filed a lawsuit against zillow a while back, for this very reason, and the *only* reason that lawsuit was tossed, was because Zillow came out "loud and proud", stating that the zesstimate was an inaccurate toy, *not* an appraisal, and no one in their right mind would believe it, or try to use it in negotiations.

    The existence of this thread proves otherwise.

    Normal, otherwise rational people *think* "the zillow" knows something that their own real-estate agents aren't telling them. That's a problem for zillow, not for me.

    I take great offense to the idea that protecting myself *from* zillow is somehow "unethical".

    If anything, creating a website that caters to those who *hate* agents, then selling ads and leads *to agents* is a bit of an ethical challenge to me. Seriously, check out the discussions on zillow *about* agents, then compare that to Zillow's revenue stream - and tell me with a straight face *who* has an ethical problem.

    As for needing an "ethics class", well, to be honest I've been putting off taking mine - I wasn't sure if I was required to *pass* an ethics class, or if I'm supposed to * fail* the ethics class to remain a realtor in "good standing". That's kinda how things are in Phoenix.

    0Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    14y
    Originally posted by Mark H.:
    Originally posted by Ann Bellamy:
    I don 't think Zillow's publishing of inaccurate information justifies your intentional misinformation.

    Using that logic, we'd all be thieves and murders, because if someone else is doing it, we might as well do it too.

    That's quite a comparison, but how about if we flip it the other way?

    Let's preface this by stating that any house I sell or offer for rent is the best on the block. My houses are cleaner, fresher & better maintained than the competition, which effectively makes *every* AVM inaccurate, they're always too low.

    What right does an outside for-profit company have to tell potential buyers/renters that my property is "overpriced"?

    Should I be forced to deal with lowball offers based on inferior & inaccurate "comps"?

    If Zillow were to claim in writing that they were "accurate", I might be able to sue them for causing me financial damage, or at least get them to allow me to "opt out".

    I can go after an appraiser's license if they hack an appraisal, who can I turn to when Zillow costs me money unfairly?

    Zillow is operating on the fringe of the law - with just enough "credibility" amongst the public to cause financial damage, but dodging responsibility for accuracy.

    And they're making a profit in the process by selling ads & leads based on those inaccurate zesstimates.

    Zillow *caters* to that percentage of the population that doesn't trust agents, so there is *no* counterbalancing force to say that , "Yes, that house went for $xx, but it smelled like cat piss, and someone stole the copper out of it!".

    By catering to those that don't trust agents, and don't have access to "real" comps, Zillow is telling that segment of the market exactly what *they* want to hear - you can buy a "perfect" house, for the same price as a dump.

    Borking a zesstimate just keeps zillow from running off potential customers that really might *like* my property, even if it costs more than the dump down the street. If my property is overpriced, it won't *ever* sell or rent, no matter what I do to the Zesstimate.

    You can dance around the issue, but the truth is, you are dishonest.

    0Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    14y
    Originally posted by James Vermillion:

    You actually spend your valuable time editing data on Zillow? I would think that most people, especially real estate investors could find something else to do that help grow their business.

    I beg to differ. I go in and edit my properties to make sure they are Accurate. Sometimes on a MFH the bedrooms or baths are inaccurate. Sometimes the pointer on the map is not correct. Sometimes the details are not up to date or detailed enough.

    It is a tool that enhances the public face of an expensive asset. I do not see how spending 45 minutes on a $200K property is a waste of valuable time.

    0Reply
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