Zillow pricing inconsistency

Zillow pricing inconsistency

Investor · Orange County, CA · Member since 2018 · 42 posts · 16 votes

I am not here to complain about Zillow giving an inaccurate Zestimate value - I know it's a free tool and it assigns a value to almost each home in America so one can only expect so much.  But I noticed that lately there is a baffling internal inconsistency in the website.  When you look up a house eg in Southern California or Philadelphia, the Zestimate history graph of a city has been fairly consistent in the past few months, stable or even doing down in the past 12 months.  On the other hand, for the same house if you scroll down you see the "Zip code stats" describing a blazing hot market going up by 10% or more in the last 12 months.  What is going on??

The Case-Shiller home price index has shown huge gains for most urban areas in the last 12 months, by 10% or more.  This is very important information for investors.  Redfin estimates are also much higher now than a year ago.  I wonder what's happening to the once trusty Zestimate, whether it has gone off the rails or I'm missing something. Thoughts?

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    Uhh...I don't recall Zillow every being "trusty" in the past. It's a computer algorithm, not a real person that understands location, different conditions (granite vs. formica), and all the other things that go into valuing property. Zillow was "generally" accurate ten years ago, five years ago, and five minutes ago, but it has never been great. I've seen homes priced incorrectly since the company first began. It's a good concept, but no computer should be trusted to determine value because there are too many variables they can't see.

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  • Real Estate Agent · Cedar Falls, IA · Member since 2009 · 38 posts · 17 votes
    5y

    From my understanding, Zillow is now a brokerage and now they have to play by new rules. I have read that they are changing their Zestimate to their instant offer price so the price on there might not be what the market value is but what they would pay you. I would expect of a lot of their values to go down 

  • Investor · Orange County, CA · Member since 2018 · 42 posts · 16 votes
    5y
    Originally posted by @Darren Flater:

    From my understanding, Zillow is now a brokerage and now they have to play by new rules. I have read that they are changing their Zestimate to their instant offer price so the price on there might not be what the market value is but what they would pay you. I would expect of a lot of their values to go down 

    This is a very good point Darren and I thought about it as a main reason too - since Zillow started offering to buy properties, they have an interest for their estimates to be lower, and it undermines the whole concept of aiming to be an impartial arbitrator.  I might turn to Redfin for estimates in the future - as for Zillow, I would like to think that they would learn their error and take the high road, but there is just too much money at stake for them to leave things as they are...

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