Glenview homeowner sues Zillow over 'sloppy' estimate
In 2014, I wrote a blog post about Zillow and I decided it’s time to turn my attention back to this again. Today, Zillow is still very much in the news and a big player in the world of home values.
What caught my eye in 2014 was a blog post written by another appraiser in Philadelphia (Michael Coyle of The Coyle Group) who had compared 20 of his company’s appraisal values to Zillow’s value estimate (with similar results to mine). This inspired me to do my own study and the results were pretty surprising (click here for more info on my study). Which brings me to an interesting article on ChicagoBusiness.com that popped into my feed today: According to the Crain’s article, a homeowner has decided to sue Zillow “alleging that the real estate site's relatively modest estimate of her home's value has created a "roadblock" to selling at what she thinks it's worth.” This homeowner’s main issue is that the Zestimate for her home is lower than the amount she has listed the home for and it’s causing prospective buyers to balk. Click below to go directly to the article.
The Accuracy of Zillow's Zestimate in Chicago
You can read the article for more info about the suit, but I wanted to point out one of the most important facts pointed out in the article that was taken directly from a page on Zillow. It has a chart illustrating its accuracy, or lack thereof. In Chicago, it's Zestimate is within 5% of the sale price 47.4% of the time (or in other words, it is off by over 5% more than half of the time).
The median sale price in the city of Chicago in the last 12 months is $277,000. Let's say a homeowner wants to sell their home without a real estate agent in an effort to avoid paying commissions. They look up their home on Zillow and decide on a list price based on Zillow's Zestimate. If Zillow's estimate is off by 5% (or greater), that would result in a $13,850 difference! And that's giving Zillow the benefit of the doubt by only applying 5%. On my prior study, there was an average difference of over 20%.
Homeowners - Please don't rely on Zillow to provide you with an accurate value of your home. Call a local real estate agent, or even better yet, an appraiser to help you determine an accurate value for your home. This will allow you to sell it in an appropriate amount of time at the highest possible price without leaving thousands of dollars on the table.
Bonus Takeaway - It's interesting that its off by 5% or greater over half the time. Why not just hire a real estate agent and pay the 5-6% commisions? In addition to a more accurate list price, they can provide marketing, staging, profession pictures, advice, etc that can also result on you selling your home for more money that you would on your own.