Why is Zillow Always so Wrong about Home Valuations in Georgia?

on 24 November 2014

Before trying to answer this question, perhaps it would be a good idea to check if the premise of the question is even fair.  Well, you can test it out for yourself.  If you are a home owner, put your address in on www.Zillow.com and see what information you get.  

There is a high probability that you will dispute that number.  It might be high or low, but it’s probably not what you think it ought to be.  If you don’t own a home ask a friend to do this and check out their reaction.  I already know the answer.

The fatal flaw that Zillow suffers is common to most any automated valuation system.  Zillow’s estimated values are based upon multiple sources.  Sometimes the county tax record is referenced.  Or it might be a recent sale of the same property or another property that the Zillow algorithm believes is similar.  It might be a combination of all three of these, or even some other source such as a similar property listed for sale by owner—an owner that does not have a realistic understanding of his property value.  Such values serve only to skew any calculated outcomes.  There is plenty of room for error with such systems.

For example, I just looked up my personal residence.  Zillow thinks my home has 4 bedrooms and 2.5 bathrooms.  It actually has 5 bedrooms and 3.5 bathrooms.  It’s been like that for more than 30 years!   It also erred on the size by nearly 500 square feet.  By my estimate, which is a pretty well qualified one, Zillow is off by about $30,000.  That matters to me.  It would to you too.  If you just want a ballpark figure, Zillow’s probably okay, and over a duration it probably will indicate pricing trends if you track the numbers for a period of time, but that’s about the total value of this system.

Nothing beats a human interface in such problems.  There are so many variables to be considered.  For example, what if the entire interior has been remodeled which might add tens of thousands of dollars to the value?  Zillow will not know this, at least not until the public record is updated the next time the property is sold.  This could even happen in cases where a major renovation is done on the property for which a building permit is filed.  A new value of the property will eventually be assessed by the county tax appraiser, but that could take years to happen, and even when it does, it may not be very accurate because usually county appraisers never enter the property.

You might believe that I am making this argument because I am a professional real estate agent and I’m just venting sour grapes.  Well, not really.  You see I have to deal with the inaccuracies of Zillow nearly every day.  Sometimes I have to overcome a Zillow estimate found by a seller prospect when my job is to sell the property to a knowledgeable marketplace that knows better.  Not only do I have to overcome a buyer’s offer objection I also have to overcome the seller’s pricing expectation in order to do my job successfully for that home owner. 

This also happens when dealing with buyers, especially when the Zillow valuation is low and the buyers spot it.  Now I will have to overcome that objection to bring the parties together on a realistic sales price.  You might conclude that that’s just too bad for me.  But that’s not the end of it.  If a buyer fails to buy a property, one that is just the right fit for them, because of the pricing confusion caused by Zillow, they will have possibly missed a once in a lifetime opportunity.  I have seen this far too many times.  It’s really not about me.  I eventually get paid when the buyers buy, and if they are serious buyers, they eventually will buy.  It’s just a shame that they were poisoned from buying the house they really wanted and truly deserved because of the inaccuracies of Zillow. 

The bottom line is that Zillow makes it harder for me to do my job.  And it really does not serve the consumer well either.  It probably causes more confusion than help.  So if you’re in the market, whether buying or selling, go ahead and look at Zillow if you like, but just understand that you may not be getting a true picture.  Good luck with your real estate endeavors!

Daniel R. Wilhelm
Roswell, Georgia
Executive Broker
3 Options Realty, LLC., CRMC®, The Green Broker
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The author of this Blog is neither an attorney nor an accountant.  Nothing written should be construed as legal advice.  Conclusions conveyed are outcomes based upon practical experience and should not be depended upon to be a common outcome of other similar circumstances. Consult with a professional before making tax or legal decisions about real estate in Roswell, Milton, Alpharetta, Johns Creek, Woodstock or any other Georgia municipality.