Good stats/examples. The first one doesn’t bother me as much because Zillow is pretty close to what they’re asking (which some properties are still selling around asking prices, believe it or not… when priced right). The second one seems way off. It must be the lot size or something.

Have you looked into buying a foreclosure? I’d be interested to hear your experience/perception regarding auction homes.

Take this listing, for example, http://www.redfin.com/stingray/do/printable-listing?listing-id=393600

This house has been on the market for way over a year for $495,000. Zillow has it valued, at the present, at $485,000. Now, don’t you think that if that house was worth that much that someone would have bought it by now?

That house is worth $350,000. It’ll be worth less and less as we march through 2008.

How about this house. It’s in the same neighborhood because this is the neighborhood I’ve been staking out.

http://www.redfin.com/stingray/do/printable-listing?listing-id=1461899

Zillow has it valued at $730,000. HAHAHAHAHAHAHAHAHHA!!! Not a chance! That thing has been on the market since AT LEAST last november for $579,000. Nobody will touch it. I’ve looked at it and I’d bet that someone would buy it for $450K.

I could go on and on with examples, but I’m sure you get the point already.

Like I already said, when the majority of your sales are the foreclosures, you’ve got to come to the realization that those are the houses that are priced properly.

Question for you… do you think it’s possible to accurately appraise a home with a fancy algorithm? In other words, do you think Zillow’s math (or data) is just plain wrong or are they trying to name the impossible?

Thanks for the further information. A lot of reputable sources (including trusty Redfin) are telling people to price their homes ahead of the market (i.e. lower than what sold just yesterday)? Sounds like Zillow is appraising homes as if they were to be sold at the same time as the recent stats. Given the current state of the market, wouldn’t it be a good idea to price “ahead” of the current stats with an assumption of accelerated decline?

Also, for those wanting to check out the site David lists above, copy and paste without the period.

Oh, and by the way, enough talk about San Diego. We have a condo down there which I regard as a gigantic wart on our financial face right now.

The first one’s a trick question. The sale is a foreclosure. Foreclosures are distressed sales at a discount to market value. Zestimates are an estimate of market value (not foreclosure value.)

Now as for the 2nd one, you might want to click that link again … that Zestimate is $624K. It has been since Monday. But, in your defense, Julie, it did increase recently and that sale was again a foreclosure, so I’d typically expect this Zestimate to be higher. Mostly though, I wonder how you get 3 full bed rooms in a thousand squares.

So, by my count, Zestimates far from failed this test. The 3rd sale was actually a deed of trust and so, while not a totally normal transaction, you’d expect it to be the one closest to the home’s market value.

How does Zillow handle foreclosures? First; don’t expect Zestimates to approximate foreclosure values; they should typically be higher. We exclude historic foreclosure sales when calculating a home’s Zestimate because it wasn’t a true reflection of the home’s value at the time. And lastly, we don’t include recent foreclosures in the algorithm that calculates the Zestimate – just like a Realtor will typically exclude foreclosures from their comps list.

That all said, remember that Zestimates aren’t intended to be the final word in home values. Now, go find some REALLY challenging Zestimate values for me to explain.