Zillow has had Greg’s attention for a long time, going back to an Odysseus post from last February, when we were blogging for our own entertainment. Greg has debunked Zillow, he’s defended Zillow, but till this week I’ve been indifferent. Zillow has held as much relevance for me as Ragnarok Online. Both have inspired a lot of buzz among their audiences, but neither made my life better, easier, happier, so I’ve not wasted time on them.
But this past Monday, when David Gibbons told us about Zillow’s plans to add the For Sale and Make Me Move tools to their comprehensive database, he gave me a reason to care. When someone hires me to sell her house, one of my jobs is to let as many prospective buyers as possible know that this house is for sale. Zillow will help me find an audience that I might not already be getting through buyers’ brokers, drive-bys, Realtor.com, open houses… So now Zillow has made my life better, easier, happier, by giving me a tool to bring my client’s house to more potential buyers.
To get to know this new tool, I claimed our own house on My Zillow. Here I got to experience first hand the problem with using Zillow for an accurate estimation of a house’s value. We live on a wonderfully eclectic street of ranch, bi-level and split-level 1960’s houses in the North Central Phoenix subdivision, Terry Terrace. Lots are all around 8000 square feet, but the houses range between 1400 to 2850 square feet. At 1993 square feet, ours is about average. The people who remodeled the house before we bought it did some wonderful things — enclosing the carport to make a 2-car garage and landscaping were minor compared to the the major improvement of raising the ceiling and removing the labyrinth of walls common in 1962, to open up the living area side of the house into two huge, very livable and very workable rooms. Then they added requisite granite, 18″ tile, designer cabinets and upgraded appliances. And, since we’ve moved in we’ve upgraded the bathrooms and all the light fixtures. Zillow doesn’t know any of this, of course, unless I tell them. Smaller houses, more unfashionable homes on our street are listed right now at between $429,000 to $510,000. We’re in process of refinancing just now, to retire an ARM, so Greg ran comps on our house. They range from $438,500 to $480,000, so we conservatively estimated it for the lender at $438,000. Imagine my surprise to learn the Zestimate on our house is only $376,637! The Value Range they assigned is $331,441 to $421,833. The good news is that once I fed Zillow with the corrected information on our house, The Owner’s Estimate went up to $464,067. Then, compare this to the professional appraisal of $503,000 that came in just today!
Whew… did you catch all those wildly divergent numbers to describe one fairly average house? Galen Ward wrote on Rain City yesterday about why he thinks Zillow isn’t taking API feeds from Real Estate brokers. But here’s what I think the problem is — reconciling the list price with the Zillow price. I told David Gibbons that this was going to be a problem for me. So yesterday, when I inaugurated Zillow with my first listing it took me longer than I would have liked. Before I could enter the listing, the house’s owner and I had to fix the estimate.
One thing that I learned by claiming my own house and helping my seller claim and correct his is that the comps that Zillow uses are less reliable than even the tax comps. My seller had no problem going through the first three steps of Zillow’s five step “My Estimator”.
In Step 1 the home owner edits the home’s facts. On my own house, here is where I showed the number of bedrooms we have and the year the house was updated… information missing from the Zestimate. On my seller’s home, this step resulted in his house being valued $17,926 more than the Zestimate.
At Step 2 the home owner enters recent home improvements and their costs. Here’s where I described the “Upscale” kitchen remodel in my own house. The recent upgrades my seller made in his house improved the Zestimate by $10,020.
Step 3 lets the owner add other features he thinks are important for calculating the value his house. Here is where I told Zillow that the ceilings had been raised and walls removed to update my home. This step improved my seller’s Zestimate by $5,000.
Step 4, I believe, is going to be the most difficult step for people who are not in the real estate profession to complete on their own. This is where the home’s owner needs to select the neighborhood houses that are most comparable to his own. Here’s where I had to help my seller, and here’s where I’ve found Zillow to be really out there in left field. I live in a very non-hemogenous part of Phoenix. From my front door, I can easily walk either to a really rough area of town or into a neighborhood of million dollar homes. While the Zestimate didn’t take the million-dollar homes in account, it definitely did include houses from the more depressed area in it’s Comps. In the case of my client’s house, Zillow compares his 1608 square foot, 2.5 bathroom home to condos that have less than 1,000 square feet! Once I fixed the comps, we added $5,366 to the Zestimate.
Then Step 5 is a simple Save.
When we corrected the Zestimate, the value given as “My Estimate” went from $233,443 to $271,755. This is good, because we’re listed at $270,000!
Adding the listing itself was easy… as easy as putting the listing onto Craig’s List or eBay. But this is better than Craig’s list, because now that the information is entered I don’t have to enter it again, I just need to verify that the house is still for sale as long as it is. And this is better than eBay because it’s free!
One more neat trick I found upon listing the house for sale: You know how GoogleEarth or MapQuest or any of the other mapping sites that overlay the address on top of a satellite aerial never quite match up the address to the picture of the structure? David Gibbons explains how Zillow matches the addresses to the picture of the house, and why these might not be perfectly aligned. What is really cool is when you list a house for sale, you can use your mouse to drag the little icon representing your house to the actual location that you’re able to visually locate on the aerial view. I would love it if Zillow used these adjustments to create better accuracy in the Geocoding, and then let my GPS provider use that data to give me better directions when it’s talking me to a house.
There has been a lot of speculation about the long-term implications of Zillow. As usual, I’m interested only to the extent that Zillow makes my life better, easier, happier. Although I still have strong objections to the idea of putting one of my listings on Zillow.com if my list price is higher than the Zestimate, I’m game at working toward fixing the Zestimate. And as long as I can demonstrate why the Zestimate is wrong, and the Zillow listing introduces more potential buyers to the home my clients are selling, I’m all for it.
BloodhoundBlog’s team coverage of the Zillow.com upgrades:
- Greg Swann: 2006 is the Year of Zillow: The 900 pound AVM has been upgraded to be a free listing platform and the presumptive national MLS system…
- Greg Swann: Early morning Zillow news round-up…
- Greg Swann: Zillow redux: A post-diluvian retrospective…
- Kris Berg: Louis Vuitton and the French Revolution
- Greg Swann: You were saying…?
- Cathleen Collins: In the trenches with Zillow.com: A working Realtor’s first-hand experience listing a home…
- Greg Swann: Zillow.com versus Realtor.com: Nothing grows in the shade of great tree…
- Russell Shaw: Thank You, Mr. Barton, May I Have Another?