Helping my clients understand Zillow's Numbers

I love Zillow, this blog post is not a Zillow bash. I am trying to help my clients understand Zillow's numbers.

I have been a Premier Agent with Zillow for over a year and I have met some amazing clients through Zillow.

I was a huge Zillow user before I became a real estate agent. I like statistical data, I am a numbers driven person and so are 90% plus of the clients I work with. However, some times the Zillow numbers are hard to understand and they lead to more questions than answers. My clients ask me all the time about why the Zestimate is so different than the list price on some homes here in Silicon Valley? I thought I would answer the question.

There are two main issues that cause so much confusion on a Zestimate in Silicon Valley, the small sample size and the diverse housing stock.

For example, on average in any given year only about 350 houses sell in Mountain View, CA. So this means in any given month less than 30 houses are sold in Mountain View, CA. On top of that Mountain View, CA has several very distinct neighborhoods and the price you would pay for a similar house in one neighborhood verses another neighborhood varies greatly. So you may find yourself with only 3 or 4 houses selling within any one year that are really compare to yours. But Zillow does not "know" which houses sold are really the ones comparable to yours, they know what sold next door or down the block. Finding true comparable homes in Silicon Valley is sometimes more art than science.

I have engaged in many an art/science project to help my clients understand the right price to offer on a property or the right price to list a property. The Zestimate is good to know especially as the seller as it can impact the offers you receive from a buyer. If you are a buyer please work with your agent on a price and do not get caught up in the Zestimate of the property as being the market price.

What Zillow knows is that your neighbor next door sold her house for $523,000 and another house around the corner sold for 1.8M last month. If these are the only two houses that sell in your neighborhood they can become part of the basis for the Zillow Estimate of your home, even if they are nothing like your home. The sale of the higher end property is probably going to increase your Zillow estimate, which can make you feel really good that your property values have increased. However, when the next two properties to sell in your neighborhood sell for $624,000 and $567,000 you are left wondering why your Zillow estimate went down just a month later.

When you have very small data samples the data can fluctuate very rapidly and over/under value your property very quickly. At a zip code or city level Zillow does a great job of reflecting the price trends here in Silicon Valley. It just does not have enough data to accurately estimate most homes in the Silicon Valley. The data samples are too small and too infrequent. This statistical sample issue is only made worse with the wide variance of housing stock in any one neighborhood.

Unlike many areas in the country, the Silicon Valley does not have large developments of recently built homes that are very similar in size and amenities. Most of the large development projects happened in the 1950's to the 1970's here. Many of these houses have been replaced, added onto and or remodeled in the years since they were built. A few of them have not been touched since the day they were built in 1958. I recently posted on Facebook a kitchen in an Eichler that had never been updated! Of course this untouched Eichler sits in a sea of rebuilt newer homes. The Zestimate for this Eichler is not in line with the true value of the property as a potential lot not a home. Sorry in advance to the rabid Eichler fans that I think this is a tear down, not a restoration project. Please I have owned an Eichler, I know when to let go.

If you go to Zillow and look up the accuracy of their Zestimate it explains very well about their estimation process but it seems that very few people bother to read this page:-)
http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

Condo Bingo Anyone?

One of the things I love most about my job is the unexpected. There always are many things that can happen on the journey to buy a new home. This morning I had the opportunity to go with a client to put an offer on a new condo under development. We were told that there could possibly be more people interested in the condos that were being released than there were condos available. Even with this warning we were not prepared for the wall to wall number of people wanting to have a chance to buy a new condo nor were we prepared for the way the selection process was carried out.

There were a few lucky owners to be that got their first choice condo. They were given their paperwork and sent on their merry way. I am wondering if they were happy to be the one and only or if they are second guessing that they picked an ugly condo…

The majority of potential condo owners had their ownership determined by a Condo Bingo.

Condo Bingo works like this:

You wait for the unit you gave as your first choice to be called out. Then you and the other condo contestants go to the front of the crowd and pick out which bingo ball is going to determine if you get to buy a new condo today or not. Some condo contestants agonized over which bingo ball was going to be lucky enough to bring them a home. Others like my client just asked to be given a ball so they could get the silly process over with. The balls were placed into the bingo ball spinner and whoever’s ball dropped out the other end got the condo.

My buyer was a Condo Bingo winner, but this was the strangest way to get a new home I have been a part of so far.

Would you play Condo Bingo?

Carla Dimond
Realtor-Lifestyle Neighborhood Specialist
Keller Williams Realty-Cupertino
Cell/Direct: (650) 388-8820
carla.dimond@gmail.com
www.findahomeinsiliconvalley.com
DRE # 01871201