We have had a lot of feedback from readers about our first article about the Zillow.com
website which was published here during the week of February 12. Nearly all of
the writers were extremely negative about Zillow. For example:
"This website is highly inaccurate. The values of the homes are not even
close. A house valued at 380K will come back on Zillow as 212K. They have a
serious database problem."
"It's a very BASIC GUESS. It cannot 'see' the house (if the house is) damaged
by a storm or fire or anything else. It cannot 'see' (if) the property is waterfront
or has a spectacular view - or not - and compares (it) to only what's close
in proximity - or the property that is gutted on the inside. Hey, it is free
so everyone can use it at their own risk. VERY misleading in many areas and
only decent for 'cookie cutter' neighborhoods in disclosure states. You can
trust it about as much as a pie in the sky."
"Fun with Zillow. Change the year your house was built. For some reason
if your house was built in 2000 instead of say, 1956, it is worth a couple of
hundred K less. At least mine was. Add a bedroom. 25k less. Two houses. Next
door. Same sq footage, yard and house, 200k difference. Suffice to say, needs
work. And in the short term will cost some poor sod who has to sell his house
and has a bad zestimate a lot of money."
The bottom line seemed to be that readers felt we were much to kind to this
new and highly hyped website.
Well you didn't give us a chance to finish.
We tried to give Zillow a lot of leeway as it is a Beta site and is obviously
evolving by the day. But there are definitely problems, the most obvious of
which is that there is limited data available for much of the country or Zillow
utilizes information which seems to bear a poor relationship to actual market
value. At a later date, after giving Zillow a little more time to get its act
together, we will look at metropolitan areas where Zillow itself rates its performance
well and compare its "Zestimates" and home descriptions to listing prices and
other information available on real estate websites and newspaper
open house ads.
But, even as a Beta site and given that we didn't have a lot of contacts
in areas where Zillow gave itself multiple stars for data accuracy and availability,
we did find some strange bits of information and data that was certainly not
For example, Salt Lake City, Utah showed some very unusual numbers when first
checked two weeks ago. A 13 room house in one of the city's better neighborhood
was sold by a relative in 1994 for around $320,000. She then bought a luxury
condo in a high rise for $260,000. Salt Lake is not Las Vegas. Home
values have accelerated lately, but have been flat for many years.
When we first checked out the house and the condo last week they had a Zestimate
of well over $1.5 million and $1.2 million respectively. Unfortunately we did
not print out the information but called someone else who knew the area and
who confirmed what we had seen. This person also checked on a nice three bedroom
slab ranch she had once owned slightly south of the city and was speechless
to see it Zestimated at over $3.7 million.
A week later we rechecked all three of these properties and found that - whoops
- there was no Zestimate on any of them and that the assessed values of
these homes were a much more realistic at $280,000, $320,000 and $297,000.
When we checked again today, all but the slab ranch had completely disappeared
from the database.
The most innacurate information on Zillow came from a close suburb of Washington,
DC in northern Virginia. There a friend reported that her house and the house
directly across the street were both Zestimated at $471,000. My friend's house
is a charming four bedroom, 2 bath early 20th Century craftsman style home in
pristine condition. The kitchen was remodeled and a family room added some 20+
years ago and both kitchen and family room have all of the bells and whistles.
The neighbor's home was gutted and nearly doubled in size at least four years
ago. My friend's home is assessed at $692,000 and recent neighborhood sales
ranged from $750,000 to $950,000. The house across the street has been valued
by realtors at $1.2 million. The Zillow Zestimates bears no relationship to
any of the real numbers she provided yet Zillow gives itself four stars for
its accuracy in Northern Virginia, states that its data quantity - i.e. the
availability of data elements - at "most" and ranks its Zestimates as coming
within 10 percent of the actual selling price 70 percent of the time. This was
substantially higher than the three stars, "most" and 66% ratings it gives itself
in the Boston/New Hampshire/ Connecticut area which we found to be much more
It is a shame that Zillow came on line before it was ready for prime time.
The hype has been incredible - ABC's Good Morning America featured
it this week and, as we stated at the beginning, CNN, CNET, Motley Fool, USA
Today, Business Week, and dozens of metro newspapers have given it a lot of
free air or ink. Many people have visited the site, came away disappointed and
may not bother to go back. Better that Zillow had all of their ducks in a row
before going public.
There is another website that is threatening to "revolutionize"
real estate. While Redfin is geographically limited (to the
Seattle area) it offers a new way of eliminating real estate agents from your
life. This time the target is the buyer, the method is a sort-of auction, and
we will take a look at it this week.