Page 2 - Leo Rising - June 2019

WHAT!?! Zillow’s Much Talked

About Home Value Estimates known as

“Zestimates” Are Incorrect & Inaccurate?

This is Brand New* Information…

*Yes, sarcasm intended. a “median error rate” of about 8%.
Again, you must pay attention to
When something is popular, it is hard to certain words and phrases to accu-
convince people “that popular thing” could rately decipher, 1) starting point, 2)
be wrong. After all, “everyone is doing it.” median and, 3) error rate. Let’s start
And, “everyone” believes in it. Hopefully, with the first. “Starting point.” Trans-
knowing what you know about the masses, lated, you should not depend on this
peer pressure, especially if you are a con- information outright. You should not
trarian, you see how Zillow’s “popularity” make any critical decisions based
could be misconstrued for accuracy. In fact, on this information. You should not
according to the LA Times, “When ‘CBS count on this information. At best,
This Morning’ co-host Norah O’Donnell Zestimates are a starting point. At
asked the CEO of Zillow about the accu- worst, could be terribly misleading.
racy of the websites automated (red flag:
automated) property value estimates known And yet many homeowners, accord-
as “Zestimates”, she touched on one of the ing to the article, take Zestimates as
most sensitive perception gaps in American real estate. “gospel”. Often quoting them as justification for making a low
offer when buying a home, or when listing a home, to justify a
There are five key words and phrases in that last sentence price that is far beyond the home’s actual value.
that are of importance:
1. Accuracy What most consumers don’t understand, though, something
2. Automated I’ve said repeatedly, is that Zestimates for Zillow are nothing
3. Touched On more than a marketing ploy to generate leads for real estate
4. Sensitive agents. This is how Zillow makes its money.
5. Perception Gap
According to a recent Inman News column, Zillow collects
First off, her question is only “sensitive” because there is the money from over 57,000 real estate agents nationwide.
perception (by the mass number of homeowners) that Zesti- In other words, when a homeowner visits Zillow.com and
mates are an accurate and legitimate means to determine a submits their property information, it’s this information that is
homeowner’s property valuation, but they are not. So now, used to determine which real estate agent in Zillow’s data-
Mrs. O’Donnell’s question becomes, not a question, but an base, that has paid to advertise on Zillow, is displayed and
expose. In essence, “What do you mean Zestimates are not recommended to you.
accurate? Zillow is the most popular online real estate infor-
mation site in the world, with 195 million unique visitors per So to say Zillow is a consumer-focused site, when they’re in
month. It’s been billed as the most comprehensive real estate bed with real estate agents and agents are their paying cus-
information site too. Buyers and sellers depend on Zillow to tomers, is likely a stretch, perhaps even dishonest.
make smart and informed decisions. Now you’re telling me,
and everyone else in America, Mr. CEO, that your Zestimates The second point of question, that a homeowner must consid-
are not accurate and may in fact be wrong by vast margins?” er, is the “median error rate.” Nationwide, CEO Rascoff admit-
ted it is about 8%. But what is omitted from that statement is
That is basically what those 5 keywords and phrases are hint- the fact that, in one part of the country error rates could be as
ing at, “We believed, we (the public) could trust Zillow, and high as 40%, while in others maybe only 2%. Said differently,
now you’re telling us that we can’t. So what’s the real truth?” locally, for your property and specific situation, you have no
clue how accurate or inaccurate Zillow’s Zestimates really are
Here’s what Zillow CEO Spencer Rascoff had to say, they’re without digging in and doing a lot more research. According
“a good starting point” but that nationwide… Zestimates have
to the LA Times article:

2 JUNE 2019