Let’s revisit Encinitas Ranch for an example of how the zestimates will affect the post-frenzy era. Consider the ER comps since my $3,760,000 sale closed in November.
This is where the algorithms should perform beautifully because there have been eight sales of similar tract houses built at the same time on similar sized lots and views. All eight of these sales closed at prices at least $200,000 below my sale.
If zestimates are accurate, ours should have dropped to at least $3,500,000, and there is a model-match sale at $3,050,000 in March – the height of the frenzy.
What does Zillow think?
What they are doing to the marketplace should be criminal, because buyers and sellers both want a quick value check to verify their hopes and dreams – yet even in the very typical tract neighborhoods, the zestimates tend to be way off.
What’s worse is once a home goes on the open market, they reset their zestimate to be close to the list price so no one can tell how wrong they are.
Is it feasible that the traditional way we’ve determined home values gets phased out, and we just let our masters shove garbage down our throats? Absolutely, and because the real estate cycles have been eliminated, we won’t know the difference.
Let’s point out that this sale closed yesterday which is on the same golf course, but is apples and oranges compared to my sale. It is 5,200sf on a half-acre lot which puts it in a different league:
https://www.compass.com/listing/1202-via-zamia-encinitas-ca-92024/1012366247845475561/
I’ll have video of this later!
Normal people are starting to wake up to they types of manipulation groups like facebook, twitter, etc have been doing for years.
Here’s something to consider. How do you know that zillow is presenting the same “zestimate” to everyone viewing their site? Maybe those that are engaged to buy are seeing a lower/higher price than everyone else.
Oh geez, I never thought of that! But certainly possible.
Excellent commentary, Jim. Glad you’re highlighting these manipulative tactics.
A fool and their money are soon parted.
get good help indeed!
On the other side of this, rental zestimates, at least for Encinitas condos, are way to low. There was a 2 bedroom 2 bath village park condo that just rented for $3400 a month. The zestimate was $2850 and best I could tell zillow was not distinguishing between condo and apartment comps.
Kingside! Welcome back!
I was looking to a listing of a La Jolla property that a friend forwarded me.
What surprised me was the automated valuation section where 3 quotes are provided: EZ Value, Realtors Valuation Model, Zestimate.
The first 2 provided a price range around 2.5M ([2.36-2.89] EZ Value; [2.33-2.91] Realtor) while Zestimate gave a 3.13M valuation. I was really surprised by the difference, but after reading your post I’m really questioning the Zestimate evaluation.
Do you use any automated evaluation tools that you recommend?
I only have to use the automated evaluation tools to know what potential sellers are probably thinking about the value of their home. And then do real estate triage from there!