What do you do if your Zestimate goes Haywire? Or drops by over $150k? You reach into the darkness for answers…
Screen Shot 2016-03-09 at 6.30.19 PM
Zestimates are an interesting curiosity for me. Not because this is emerging technology and I’m a stuffy, set-in-my-ways, old school real estate guy with 23+ years in the business. I would offer that my curiosity is precisely the opposite. I graduated college with a degree in civil engineering, took 5 semesters of calculus and played with algorithms a LOT. I have written software packages that performed automated calculations. I embrace models that show trends. I LOVE statistics! My caution here is that even the best algorithm is still just that… a formula. A formula that needs data. A formula that produces results that need human interpretation and context.
Zestimate can’t pick up on renovations
We recently listed a great house in a desirable zip code in Sandy Springs, GA. The graph above captured with a screen shot on 2016-03-09 at 6.30.19 PM showed this home’s Zestimate running at about $620,000 when we put the home on the market. The owners spent a year in 2007 totally renovating and expanding this home. They also put in a Pebbletec saltwater pool. If you look at the 2007-2008 part of the graph, it shows a steady decline in the Zestimate but generally correlates with overall market forces. It’s ok though, it’s not really reasonable to expect Zillow to pick up on the renovation. How could they have known, right? No harm – no foul.
We Listed the Property… and the Zestimate goes Haywire
When we listed the property, it founds its way onto Zillow through the local MLS syndication data feed. Just like all of our other listings. The online data was fairly correct – the only thing missing was the full bath added during the renovation. Everything seemed fine. And then, the algorithm went haywire. In days immediately following the listing being posted, the Zestimate mysteriously – AND RAPIDLY – plummeted over $150,000!
Revisionist History
Now, compare the graph above with this one captured 3 days later. LOOK AT THE DARK BLUE LINE. What the heck? Same house, same algorithm, now has a different Zestimate history dating back to before 2007?!?!? If today was your first visit to this house on Zillow, you would never know the difference. To me, that is scary.
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If it is online, it must be true! Clearly – not
Our recent experience described above serves as a reminder to all of us as we gather information online. Be careful! Each source has an agenda. Zillow’s agenda is to capture leads so they can rent zip codes to real estate agents by making the agents pop up in a side banner as “Premier Agents”. My agenda is to sell houses. And that only happens when both the buyer and the seller believe a fair deal has been reached. If a buyer is unknowingly using bad data, they could very well miss out on a great house by drawing incorrect conclusions. Buying a house is a BIG purchase! Get some savvy guidance from a human being with local real estate experience and expertise.
The house Sells for $615,000
As it turns out, the original Zestimate was actually not far off. But that has to be a total accident because the data online was not correct and incomplete. Once the data was corrected, the Zestimate was way off. Which for me only reinforces the point: In the Atlanta market place, especially in areas where the houses are not uniform, you can not draw any conclusions from the Zestimate. Or perhaps I should say, you shouldn’t.
Have Questions?
Email me at michael@bunchrealestategroup.com
