Zillow is like Katie Horner - Kansas City Home Buyers and the media should ignore Zillows, Zestimates.
It reminds me of the overzealous and overly excited Meteorologist, Katie Horner, from Channel 5 news. She would always interrupt a tv show at its climax and start jumping up and down with excitement about the horrendous tornado coming toward Kansas City. It seemed like she came on everyday during the spring to announce the next big one. I've lived in in Kansas City nearly all of my life and yet to see a tornado in Kansas City. It seemed though, Katie believed a tornado would hit Kansas City everyday. After a while, most people including myself got tired of the antics and tuned her out.
There is a saying with many of my friends that goes something like this, "Where else can a person be wrong at their job over 75% of the time and still get paid?"
Since this blog post is not about meterologist, I will get going to my main point, Zillow.
It's important to understand what Zillow is and what it can be. If you live in Overland Park or Olathe, you should familiarize yourself with the
ABOUT ZESTIMATES tab on Zillow.com.
Here's what you should know
In Olathe and Overland Park, Zillow Zestimates can be off by more than 20% 66% of the time, according to Zillow's website.
In Overland Park and Olathe, Kansas, Zillow uses a proprietary formula that includes physical attributes about the home, the county tax assessment and prior and current transactions to provide its Zestimate. Zillow actually gives themselves 1 star in Kansas for this information. One star out of a possible 4 star "valuation." I wonder this... If Four Stars is their best evaluation what does 1 star mean? How accurate is a 1 star opinion versus a 4 star opinion I wonder. If a 4 star opinion is a "FAIR ZESTIMATE." I'm guessing one star means UNFAIR ZESTIMATE. I dunno.
Here's my opinion after reviewing actual sales of 25 Overland Park and Olathe homes that have sold in the past 60 days.
The Zestimate from Zillow was lower than the actual sale 90% of the time. In addition, 25% of the time, the Zestimate was off by over 10% of the actual sales price.
Although, Kansas City has a 1 star and uses the tax assessors value to determine value, I found that in 35 property searches, the Zestimate was lower than the tax assessors value 85% of the time. Yep, that is right. I wonder what tax assessor value is being used? It doesn't seem to be the county tax assessor value.
I compared the Zestimate to my real estate teams actual listings and found out that the over 70% of my team's listings were within 3% or lower than the Zestimate on that property. The odd thing is that 3 of our pending sales have appraised much higher than their Zestimate.
In review why is the Zestimate data like Katie Horner the ex-Kansas City Meterologist?
First, buyers must be looking at online estimates of homes like Zestimates, because the homes priced below the online values like Zestimates get the inquiries.
Next, and most importantly, news reporters get their housing reports from organizations like Zillow. When Zillow reports that nearly 30% of the households in an area are underwater the media starts reporting this incorrect data as fact. They don't care if it is wrong data, it gets viewers like Channel 5 got with Katie Horner.
The news media has already done their damage by broadcasting incorrect data. The incorrect data affects home buyers and home sellers. Home buyers think that their offer should be more in line with the online valuation like Zestimates. I have seen four recent offers that have been inline with online estimates. It affects home sellers because they think their homes are worth less than what it actually is values at in the current market.
Remember that Zillow gives themselves ONE GOLD STAR for their Zestimates in Kansas City. Two Gold Stars is identified as "FAIR ZESTIMATE."
Zestimate Accuracy/Star Rating: This rating is tied to the Median Error in an area.
The ratings are as follows:
= Best Zestimate
= Good Zestimate
= Fair Zestimate
= Tax assessor's value, or unable to compute Zestimate accuracy- 0 stars = No valuation
The Zillow Estimate is much like Katie Horner and many people from the media. They need hype in order to make sales.
RE/MAX sells more homes than any other real estate company.
For a reason...should we talk?
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