You know how it goes - it’s late at night, you’ve been questioning your life choices, and you’ve got a web browser right there in front of you. You know you probably shouldn’t, but you just…can’t…resist…
…so you check Zillow to see how much that house is worth, and if you can afford it! 😂
Most of us have given in to this form of suburban comparison porn to see how much someone else’s house is worth. But how good are those numbers that Zillow gives us? Can we trust what we see on the screen?
Here are Five Fast Facts on Zillow’s impact on housing:
- 🫣👀 Once Upon A Time - When Zillow launched in 2006, it wasn’t particularly accurate, as even the founder will tell you. But, it had one great thing going for it: it was provocative! It attached a dollar figure to about half of the houses in America (the “Zestimate”), and people loved snooping on them! They crashed the site within hours of the launch, in fact.
- 🐕 The Big Dog - There are a lot of home estimates online nowadays, but Zillow is the biggest and easily the most well known. It lists values for over 100 million homes, just over 70% of the market in the country. A target rich environment, indeed!
- 📊 How It Works - Zillow claims its numbers are based on thousands of data points from public sources, and are within 2.4% of the eventual actual sale prices. For houses that aren’t even on the market, they’re within 7.5%. Close enough to fudge and still call it accurate, right? 😆
- 🔍 Under The Covers - The catch is that Zillow’s algorithms aren’t all that accurate until the home actually goes on sale, and then it moves its number much closer to the listing price (though they’re not hiding this fact). But they also keep a second number going in the background that doesn’t factor in the list price, and that one only gets within 10% of the actual sale price 60-70% of the time. Hm, you can see why they don’t advertise this number, can’t you?
- 🤜🤛 The Competition - There are about 25 direct competitors to the Zestimate, and there have been a bunch for a long time. But Zillow was the one that burst into the public’s awareness, and it’s been a juggernaut ever since.
🔥Bottom line: Because a home purchase is almost always the biggest expense for anyone, this is something that affects most people’s Paychecks big time. But industry professionals will tell you that while Zillow is a nice starting point, it’s really not something you should bank on when it comes to real planning. In particular, the pricing models used by businesses – which have invested millions of dollars in them – are far better than Zillow’s tantalizing freebie info. Use it as a starting point, sure. Just don’t anchor your entire purchase or negotiation on it. So the real question is this: is Zillow a good thing or a bad thing?
Have you peeked at anyone else’s home value on Zillow before?
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