We all know that over the past 10 years, real estate has taken to the Web like a fish to water. And in that sea of real estate Web sites, none stand out more than zillow.com.
Zillow's main conceit is the use of available databases and a computer model to estimate the value of nearly every home in the country. This includes all of our homes in Ridgefield and throughout Fairfield County. Zillow's computer cycles through all the data, churns through its programs and compares each property to every recent sale. It then presents its often-quoted-but-misunderstood "Zestimate."
What got me thinking more about Zillow was a transaction that I just closed in Ridgefield. The Zestimate was off by a whopping 77 percent!
In some respects this doesn't surprise me, since these computer models cannot possibly take into account things like the home's style, decorating and property condition, topography, water frontage, beautiful views or negative influences like heavy traffic or a neighboring eyesore. Since nearly every buyer and seller (admittedly or not) checks Zillow, I thought I'd take a closer look and see how accurate the Zestimates are for Ridgefield, Redding and Wilton.
I looked at all residential home sales that have closed thus far in 2010, data that is nice and fresh. By comparing actual reported sales prices to the Zestimates offered on the internet, I discovered that in our market, Zillow is not a good gauge of value. In fact, these Zestimates proved to be off in either direction by an average of 16 percent (there were just as many over-zestimates as there were under-zestimates).
Interesting… then I wondered who might actually be using this information. What I figured out is that, when negotiating real estate transactions, some buyers are giving credence to the under-valuations and some sellers to the over-valuations.
My conclusion is that Zillow and its Zestimates can best be used by out-of-town buyers that are searching the internet for a possible place to move. This information can be useful to see relative values and general neighborhood price points. However, when evaluating a specific property or negotiating a deal, Zillow should not be deemed as a reliable determinate of value. For more a more detailed description of Zestimates, you can click here for more information directly from the source.