One of the common question real estate agents get from sellers centers around a home’s Zestimate on Zillow. Deep down sellers know what homes are selling for in their neighborhood and how their home compares. Often, they just want to try a much higher price simply because Zillow says their home is worth more. We attempt to answer the question, Are Zillow home value zestimates purposely inflated?
The buzz amongst real estate agents is they can’t believe how far off many Zestimates are these days. Agents laugh anytime the words Zillow and home values are mentioned in the same sentence because they know they’ll have to explain how inaccurate these things tend to be.
Last weekend I had a conversation with one of our sellers. She brought up her Zillow Zestimate. Within 15 minutes after that conversation I went outside to work in my yard and my next-door neighbor asked me about his Zestimate. He noticed it went up over $100,000 last month and wondered if the real estate market was that good right now.
Of course, his value didn’t change $100,000 last month. Perhaps you’ve heard the story of Zillow CEO Spencer Rascoff. His home was valued at $1,750,405 on March 1, 2015. The funny thing is, it sold 1 day earlier for $1,050,000. That’s a difference of $700,405. Put another way, Zillow was off over 40% on their CEO’s own home.
Are Zillow Home Value Zestimates Purposefully Inflated?
So is Zillow’s data that bad, or could there be another motive? Let’s remember where Zillow gets its revenue. Zillow charges agents, property managers, and lenders to appear on their website. They are gathering leads to sell to agents. Some agents pay several thousand dollars per month for these leads. Zillow takes MLS and public records data and assembles them and markets that data to the public in the hopes of attracting eyeballs to its site.
To increase revenue and charge more to agents, brokers, and lenders Zillow must increase visits to the site. One way to do that is advertise more on the Internet and TV. Another way is to change up the values frequently in hopes of getting repeat viewers to come back often and see what’s going on with their value.
We get it. The market changes every day. It doesn’t typically change $84,000 in one day. So, either Zillow’s algorithm for calculating values is off, the underlying data are off, or they are trying to create a buzz by getting people to check back repeatedly. In the news business, they call it Click Bait. Click bait is when editors write a sensational headline to get readers to click on the article. It could be fake news, doesn’t matter. If the headline works, it attracts readers which ups the hit count. The higher the hit count, the higher the advertising rates. Most reputable news organizations don’t utilize this tactic. They don’t have to because they have valuable content. Tabloids on the other hand use this with perfection.
Agents are paying top dollar presumably for new leads not realizing Zillow is stoking the fire by attracting the same old leads repeatedly. Consumers may be unaware that Zillow now has data on everyone who has checked their home value, and they are selling data like that.
Zillow Admits Errors
Zillow says that nationally their Zestimates are off by 7.9% on average. That’s a lot! However, in Seattle where their CEO’s former home is located, they claim to be more accurate at only 6.1% off. Can we really trust their numbers when they were off over 40% on their own CEO’s home?
If you’re thinking of selling, we have an automated valuation tool that may be more accurate. More importantly, we will never sell your info to other agents and brokers. Why would we? We want your business. We’d love to earn your business.
If you’re thinking of selling, call the Ellis Team at Keller Williams 239-489-4042 Ext 4 Let us show you how we put more money in your pocket at closing than other Realtors and how we sell homes Fast! And, we’ll show you what true Top Dollar is for your home so you can make accurate decisions.
We’re here to help. Always ask for Sande Ellis or Brett Ellis.
Read about Southwest Florida Real Estate Market Statistics to be released tomorrow.
Paint the Town Red
This weekend is the Keller Williams Paint the Town Red Event. We’ll have around 100 homes open in a single day. It’s the single biggest open house event of the year. Check back as we’ll be posting the addresses here.
Ellis Team Featured Open Houses
Sunday 1-4 PM