I recently attended a day long real estate event where Zillow was a presenter.  Many Realtors in South Florida cringe when clients or potential clients bring up the “Zestimate” of their home, as they have proven to be not very accurate in our area.  He brought along a graph, which most of us did not know Zillow has, showing accuracy per area.  They were being up front and transparent enough to let us know they, themselves, only give their Zestimates a 2 out of 4 star rating for accuracy in South Florida.  In fact, 47% of all Zestimates are not even within 20% accuracy ranges (that’s a 40% total spread folks!).  South Florida has the highest median error, 18.3% of any of the major metropolitan areas, and the lowest chance of the accuracy being within 20% of the Zestimate.  In fact, of the 30 metropolitan areas Zillow rated their own Zestiamtes, South Florida’s was the worst. 

Miami Dade is even LESS accurate

Only a measly 40% of the time, values are within 20%.  That means over 60% of the time, the Zestimates are off by more than 20%!!!

Many factors contribute to making South Florida homes hard to calculate from raw data…. Some areas, a street one way or the other, even in the same city or zip can make the difference of 50% or more in values.  Special features and updating is not visible in raw data, nor is condition (good or bad). With so much variety in home styles, age and neighborhood, valuating homes in South Florida takes local knowledge and personal interpretation of the facts of each property.  An estimation algorithm is not going to be able to do that.  In a tract home environment, where the homes are all alike, and you just need to adjust for square footage, pool, etc., this system will work, but very few areas in South Florida are like that and none in Coral Gables.

If you are buying or selling a home in South Florida, please do not rely on Zestimates, even for a rudimentary estimate of a home’s value.  With a 47% chance out being more than 20% off one way or the other, there is just no solid data there to rely upon.  Instead, find a Realtor who specializes in your area, who can help you understand the importance of the nuances neighborhoods and home improvements can have, and work with them to determine the best value to sell your home for or offer on a house you’d like to purchase.

{ 2 comments… read them below or add one }

sara bonert December 2, 2010 at 2:42 pm

Hey Janie – Sara from Zillow here. We can only be as good as the data we get, and in FL this is tough. Some of it has to do with the fact that we don't use Foreclosure or Short Sale data when calculating a Zestimate. So when the total volume of sales contains a significant percentage of this type of sale – it affects accuracy because we aren't able to use a huge chunk of housing data.

However, I am glad that we are able to provide this level of transparency about the Zestimate so you are able to explain to your clients what the number does and doesn't represent.

As someone who owns two properties in FL, one that I've tried to sell and current rent both – I CAN'T IMAGINE trying to transact in FL without Realtor representation. There are SO MANY things that I wouldn't even want to try to understand without professional representation. Best to you!

Reply

janiecoffey December 6, 2010 at 7:09 am

Hi Sara, thank you for commenting here. You are right, there is a great value that Zillow provides with its transparency. Areas such a Miami are going to be hard to calculate accurately merely from stats, especially if short sales and foreclosures are not included as they are a large portion of our sales. By providing this info, we are able to have informed discussions with our sellers. In many areas of the country, and our state, I am sure (and can see by the chart above), computer data is more than enough information to provide accurate estimates. I thank you again for your explanation (I didn't know about the foreclosure/short sale issue, which is especially helpful as appraisers DO use them). Thank you for taking the time to help make us more informed consumers and Realtors and how we can better understand Zillow's data.

Reply

Leave a Comment

{ 2 trackbacks }

Previous post:

Next post: