When CBS This Morning co-host Norah ODonnell asked the CEO of Zillow recently about the accuracy of the websites automated property value estimates, known as Zestimates, she touched on one of the most sensitive perception gaps in American real estate.
Zillow is the most popular online real estate information site, with 73 million unique visitors in December. Along with active listings of properties for sale, it also provides information on houses that are not on the market. You can enter the address or general location in a database of millions of homes and likely pull up key information square footage, lot size, number of bedrooms and baths, photos, taxes plus a Zestimate.
Shoppers, sellers and buyers routinely quote Zestimates to real estate agents and to one another as gauges of market value. If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers list price of $425,000. Or a seller might demand to know from potential listing brokers why they say a property should sell for just $595,000, when Zillow has it at $685,000.
Disparities like these are daily occurrences and, in the words of one agent who posted on the industry blog ActiveRain, they are the bane of my existence. Consumers often take Zestimates as gospel, said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village, California. If either the buyer or the seller wont budge off Zillows estimated value, he told me in an interview, that will kill a deal.
Back to the question posed by ODonnell: Are Zestimates accurate? And if theyre off the mark, how far off? Zillow CEO Spencer Rascoff answered that theyre a good starting point, but that nationwide Zestimates have a median error rate of about 8 percent.
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