Online real estate’s posterchild for pricing inaccuracy (warning: I have been overusing posterchild lately) has been working hard to combat that image with the release of their 4th quarter market report. Zillow has been the subject of scrutiny for the wide range of inaccuracies in their pricing of specific properties called Zestimates (and their incompatibility with Mac’s Safari browser – must use Firefox). But hey, its still in beta a year after launch.
Hint to Zillow: if a Zestimate is priced to the dollar, even with a range, it infers accuracy to the dollar. I wrote about expectations of precision last week in Values: Being Precise About Precision Expectations (aka Good Enough).
But market reports are a different animal. The attempt to value amenity differences (ie sq ft, room count, lot size, etc.) confuses many consumers and has been controversial due to inaccuracy issues. They buy national data feeds, not unlike many online service providers, and use this to come up with their Zestimates. The use of this data to attributes of a specific property is what has been tough for them (or anyone) to figure out to date.
Zillow has used this same data to crunch numbers for the quarter. However, their market studies use pricing as the main data point and there is limited consideration of amenity differences (other than location). This simplicity allows the reports to appear to be accurate, although I can’t vouch for every market.
When you consider the options for national data sources like NAR, which is a trade group and OFHEO which includes refi data in their results, you don’t have a lot of pure choices. That sounds like a cheap shot to Zillow but its not meant to be.
The report is a whole lotta spreadsheets by MSA, broken down by median sales price (Zindex). In the markets I am familiar with, the results seem to make Zense.
Tags: Zillow, OFHEO, Realtor.com, Zestimate, NAR, National Association of Realtors
Notwithstanding your disclaimer, this is quite an endorsement — thank you for reviewing the quarterly reports and for sharing your conclusions.
Your hint is well taken — Zestimate precision has been a recent topic of discussion at Zillow — we’ll give it some more thought.
Thanks too for your feedback about slicing and dicing this data by more attributes than merely geography. That’s a great suggestion for future reports. Which parameters do you think are most important to be able to filter by?
FYI – the Zindex is the median Zestimate, not a median sales price. This is again why Zillow’s quarterly reporting is unique; it considers all houses, not only those that have sold.
I see. You might consider bedrooms and square footage but you are hampered by what is actually available in public record.
Jonathan, Mirriam-Webster’s Online gives the following definition for “beta”: 4 : a nearly complete prototype of a product (as software)
Funny how all these “beta” sights are representing themselves as the finished product (except for the little “beta” tag sometimes displayed on their webpage.)
Remember the days when beta meant “being tested in a controlled environment” and people knew they were helping work out the bugs?
I guess we’re all just part of the Petri dish for Zillow and Trulia whether we like it or not. md
Wait until Zillow gets it wrong ON YOUR HOUSE and you loose a buyer without recourse. They say you can add information to correct their zestimate, but I have been waiting for a response or even an acknowledgement of the issue with nothing. Until they are transparent in their strategy they are LIABLE and should be sued. If they are using so called public information without giving the homeowner opportunity to truly amend false/lacking statements (including zestimates) they should be held accoutable for every penny the seller loses in any transaction. It doesn’t matter that they aren’t in the real estate business, they are in business. In business there are clearly winners and losers and RIGHT NOW people are losing based on their misinformation. Disclaimers or not, they should be held accountable. I hate law suits as much as the next guy but when rebuttals are ignored you make enemies and propagate bad business toward their gain.
[…] detail by home size is new to the quarterly reports this quarter (thanks to Jonathan Miller for suggesting additional detail on home amenities like square footage). As with the previous […]