Zillow is a National Property Portal. They collect and aggregate information about housing and houses for sale from all over the country and offer it up to consumers in a searchable database.
Where does Zillow get its data? The information on houses for sale comes from a variety of data feeds. It is possible for an agent or broker to physically input a listing into the National Portal, but in reality, this rarely happens. Instead, the agent or broker inputs the listing into the local Multiple Listing Service (MLS), that then ‘feeds’ the listing information to the Portal. In their quest to have as much housing information as possible, the Portal also ‘pulls’ feeds – sometimes containing the same, but perhaps not exactly the same, information – from other sources. For example, if the real estate office is a member of one of the large franchises, their franchisor may feed listings to the portals. Or a large, multi-office firm may have its own feed.
Why are there so many inaccuracies on Zillow? It is a conundrum. Essentially they are trying to do what is a local job with a national platform. They receive tons of data from multiple sources and, because they are removed from the local market, their methods of discerning what is accurate, and what is not, are somewhat flawed. So you have duplicate listings with different prices, homes for sale that were actually sold weeks, even months ago and price estimates that consider only the average value in an area.
Does Zillow provide accurate information on home values? They tell you what Zillow thinks a home should sell for (a “Zestimate”) as well as whether a home is in “Pre-foreclosure” and should be a better deal as a result. Zillow is great for a buyer or seller to browse what is for sale (even if the status is not always current), but there are a few things you should know about Zestimates.
According to Zillow’s CEO on “CBS This Morning”, Zillow’s price guesses have a nationwide “median error rate” of about 8%. That means that most of the time their estimates are off by $40,000 either way on a $500,000 home. Sometimes it is off by as much as 69%, and “Zestimates” end up not being the final sale price over 95% of the time. That doesn’t mean a Zestimate is useless – but its uncertainty does mean you probably should not use it as a true guide to a home’s value.
Zillow recognizes the limitations in its guesses and is honest about its confidence in them. Their site says you should also do “other research such as: Getting a Comparative Market Analysis (CMA) from a real estate agent; getting an appraisal from a professional appraiser; visiting the house (whenever possible).” In other words, talk to a Realtor.
Are Zillow’s pre-foreclosures really on the market? Pre-foreclosures are homes with late mortgage payments or similar issues, Zillow gets its info on them through automatic feeds from public records databases – sometimes incorrect or not up-to-date. The issue could be with a 1st, 2nd, or 3rd mortgage, a Home Equity loan, or even Home Owners Association (HOA) or Condo Association proceedings. It doesn’t really mean the house is for sale or auction, that the noted value of the outstanding loan is the price of the house, or that it will ever go on sale. It just means something derogatory has been found in a public record.
Zillow cautions that “most experts agree [pre-foreclosure] is the most difficult stage during which to purchase a distressed home. The owner may be working to cure the default . . . .” Stated differently, even if the information is correct that the owner is having troubles, the owner may actively resist a sale for months while negotiating with the lender (and/or filing for bankruptcy). So at heart, Pre-foreclosure listings sound good but usually are not quite the great and quick deal for buyers they first appear to be.
The Truth About Zillow!
