Friday, March 8, 2013

How far off the mark is Zillow for Sacramento home values?

If you have been reading my blog for a while, then you probably already know that I usually get a chill down my spine when one of my clients mentions "the Z word." What's the Z word? Zillow. What is Zillow? Zillow.com is a website that, among other things, provides information about neighborhoods and properties.

Zillow is a neat website. I have an agent profile on Zillow. I have clients who have found me using Zillow. However, my general thought about Zillow is that while it's a fun consumer tool that provides property information to people looking to buy or sell (or even rent property now), the vast majority of the time, the "Zestimate" (aka, the value that the website dreams up for a certain property), is usually not close to the market value of a Sacramento area property, and the homes listed for sale on the website are not current.

Let's take my last few closed transactions. I closed 4 transactions last week (all equity sales), and February was a pretty busy month for me. So this information is CURRENT as of today, March 8, 2013.

1804 2nd Avenue, Sacramento, CA 95818; this was a home I listed in Land Park. The original listing price was $279,900, and this sold on 2/26/13 for $285,000 -- 1.82% above it's listing price. Zillow's Zestimate: $271,690 -- approximately 4.89% below it's selling price.

8020 Walerga Road #1016, Antelope, CA 95843; this was a condo I listed in Antelope near Walerga and Elverta. The original listing price was $109,900, and this sold on 2/26/13 for $123,000 -- 11.83% above it's listing price. Zillow's Zestimate: $102,815 -- approximately 19.63% below it's selling price.

5674 La Campana Way, Sacramento, CA 95822; this was a home I listed near Mangan Park, a neighborhood just to the south of Hollywood Park. The original listing price was $129,999, and this sold on 3/1/13 for $142,000 -- 9.23% above the listing price. Zillow's Zestimate: $116,692 -- approximately 21.69% below it's selling price.

7910 Walerga Road #601, Antelope, CA 95843; this was a condo I listed in Antelope near Walerga and Elverta (different community from the other one above). The original listing price was $129,900, and this sold on 3/1/13 for $140,000 -- 7.78% above it's listing price. Zillow's Zestimate: $103,987 -- approximately 34.63% below it's selling price.

My friend and appraiser, Ryan Lundquist, just wrote a blog recently on a similar topic -- comparing Zillow values to some of his recent appraisals. You can view that post here. I think two conclusions can be drawn from the information above. First, Zestimates are generally not accurate. They don't take into consideration property features that can not be quantified. Is it on a main street, is it near a park, was the kitchen remodeled, have unique architectural features...? Second, our dynamic Sacramento area real estate market is now increasing in value, and Zillow has a long way to go to catch up to pricing these trends and factoring them into their mathematical equations that determine these values.

No comments: