I recently read a really interesting blog article from an appraiser in Philadelphia titled “Zillow vs. The Coyle Group”. In the article, Michael Coyle analyzes over 20 of their most recent appraisals and compares them to what Zillow says they are worth via it’s Zestimate. With sites like these appearing to be gaining popularity with consumers over the last few years, I thought I would do my own analysis.
The results may surprise you, they did me. Of the 20 properties analyzed, many of which were recent sales, Zillow differed from the appraised value by more than 5% on 16 of them and the average difference was 20.16%! And the four that were within 5% were recent sales in the last 6 months. That means on an average $300,000 home Zillow’s value estimate is off by an average of $60,000. Another interesting statistic is that it was high/overvalued 10 properties and low/undervalued 10 properties. To further substantiate my results I compared them to The Coyle Group’s and noted that they found an average difference of 18.95%.
When digging deeper into the individual properties, I was unable to determine what exact factor lead to some of the biggest discrepancies. For example, the Glencoe Colonial property is currently an 1100 sq. ft. split level that is going to be torn down and a new 3200 sq. ft. home built. It is listed for $1,199,000 (the exact Zestimate value) and is under contract for around $1,050,000. This would lead me to believe that Zillow is giving the MLS list price the most weight and ignoring the actual property characteristics. However, the Zestimate was off by 41% on the Portage Park bungalow which was listed for $460,000 and sold for the same price. In this case, why would the Zestimate be $273,265? It must have ignored the list and sale price when it appeared to rely exclusively on list price on the Glencoe proposed construction. Yes, I’m scratching my head as well.
While I am not here to breakdown Zillow’s method or algorithm used for determining values, I do want to caution the prospective homebuyer/seller about relying on Zillow’s values and advise that you hire a certified appraiser to ensure that all factors have been included in the opinion of market value. This will prevent you from listing your home too high which could lead to your house being on the market way longer than is necessary. It will also prevent you from listing your home too low and potentially leaving money on the table.
You can read Zillow vs. The Coyle Group here.Immobilienmakler Heidelberg Makler Heidelberg
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Source by Paul R Rowe