Example of why you should be VERY wary of Zillow

[biosurfer1]

This wont come as a shock to most of you, but Zillow is very sketchy.

I got an email from them about a house for sale not too far from me:

https://www.zillow.com/homedetails/3728-Park-Dr-El-Dorado-Hills-CA-95762/18614239_zpid/

I'm not looking to buy so wasn't sure why the email came, until I saw who owns the house... Zillow of course.

They bought the home for $707k June 8, and relisted it for sale June 28 for $790k. I get it, they are in the business to make money, but here is where things get really sketchy. In May 2021, their "estimate" on the house was $675k, in June it went up to $700k ($25k in one month seems high but things are hot around here). After they bought it, the estimate shoots up to $845k in July, making them asking $790k look like a good deal.

So shady...not unexpected at all, but shady and really means their estimates are worthless.

[wildthing]

Well... market is hot, at least in some places. It could be going up that fast just by virtue of demand.

[Dantilla]

Any real estate professional, broker, agent, appraiser, yada yada will roll their eyes at the mere mention of Zillow.

[crb07]

I would imagine these sights are using computers to collect info and make “estimates” based on similar houses ask and selling prices nearby without a human doing any kind of comparison. Also, as someone who has been looking to move for about five years I would say the info on Realtor.com is more accurate.
But I also find Zillow ZESTIMATES are BS.

[masraum]

I've checked them from time to time for various homes, and their estimates always seem wrong/bad/off from reality.

[Norm K]

^^^ Zestimates have been notably low over the last several years in my small town.

_

[ckelly78z]

The real estate bubble will end by September when all the kiddies need to attend their new school, and all businesses will be fully staffed in the office (rather than working from home). No parent wants to disrupt a school year, so by the end of Summer, the demand will fall off greatly.

[fastfredracing]

Zillow seems overly optimistic in the area our rentals are in, and low in the area where I live .

[ted]

I was told Zillow uses the sale price on a home to help calculate the value.
If your home was bought a long time ago your estimate will be less accurate.

[Nickshu]

Originally Posted by Norm K

^^^ Zestimates have been notably low over the last several years in my small town.

_

Same here. Ours are about $300K low in our area compared to what appraisals and sales are going for. Been that way for years.

[masraum]

Originally Posted by ted

I was told Zillow uses the sale price on a home to help calculate the value.
If your home was bought a long time ago your estimate will be less accurate.

In Texas, I don't think there's any way for Zillow to know the sale price. I think the only information available for them to use is the list price.

[porsche4life]

Originally Posted by ted

I was told Zillow uses the sale price on a home to help calculate the value.
If your home was bought a long time ago your estimate will be less accurate.

Exactly. I’d bet the team that owns the zestimate has no clue that the home buying team even looked at that house. The zestimate is based off recent sales, so it will always spike when a home has recorded a sale recently. It’s the same reason my zestimate shows about 80k lower than the exact same house down the street in similar condition. That one just sold this year, mine hasn’t sold in years.


I don’t feel like the zestimate is super accurate, but I doubt there’s some grand conspiracy going on, the home market is just nuts. Most homes I’ve seen sold lately sold wayyyy over their zestimate

[biosurfer1]

Originally Posted by porsche4life

Exactly. I’d bet the team that owns the zestimate has no clue that the home buying team even looked at that house. The zestimate is based off recent sales, so it will always spike when a home has recorded a sale recently.

But that doesn't make any sense in this case. The house sold to Zillow June 8, for $7k over their Zestimate, then somehow it goes up over $140k the next month, that just happened to coincide with their listing it $80k over what they paid, in the same month?

[Norm K]

Originally Posted by nickshu

same here. Ours are about $300k low in our area compared to what appraisals and sales are going for. Been that way for years.

fc?

_

[MikeSid]

Originally Posted by Dantilla

Any real estate professional, broker, agent, appraiser, yada yada will roll their eyes at the mere mention of Zillow.

Yep. It's kind of like a patient going in to see their doctor and saying, "So Doc, I was reading WebMD and I think I might have...."

Zillow is good for a ballpark idea, but it can be a damn big ballpark.

[jyl]

Zillow has a conflict of interest. It is an iBuyer, meaning it buys and sells houses for its own account.

Financial, investment, and technology firms are coming together to make houses just another commodity to be traded and accumulated. Proptech, baby!

Becoming a financialized commodity means individual buyers getting outcompeted, less owner-occupancy, more houses in rental fleets, trillions of taxpayer subsidy, and probably even more boom-bust dynamics.

This has been going on in a big way since at least the GFC.

Politicians, even "progressive" ones, have said little about this - some because they get money from financial, investment, and technology firms, others because they equate home ownership with landed gentry etc, many because they are clueless. Left-wing political activists don't understand financial stuff and many of them are firmly in the renter class. Right-wing political activists are busy investing in proptech - or distracted by ideological crusades, like their left-wing counterparts. The mainstream media has only recently woken up to this.

The US is going to have to decide if it still wants to encourage individual home ownership as a path to financial security and social stability. If yes, it will need to disincentivize the commodification of houses. For example, a 70% income tax surcharge, a 5X property tax surcharge, and a 10% real estate transfer tax applied to entities that own, directly or through related entitities, more than, let's say, 50 houses. That would not touch individual homeowners or small landlords, but would clip the wings of the institutional house fleet buyers and traders.

[berettafan]

Interesting post Jyl.

[Tobra]

Yes, but the powers that be are not putting up with any of that jazz