Zillow’s Inaccurate Zestimates May be Blamed for Zillow’s Own Financial Woes and Cancelling their iBuyer Program

How accurate are Zillow’s Zestimates? As it turns out, Zillow’s CEO seems to have lost faith in his companies own ability to assess home values.

Company founder and CEO Rich Barton added in his report [to investors] that “we’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.”

Rich Barton

During an earnings call with investors, Barton ultimately concluded that Zillow has been unable to accurately price homes for future sales.

Our observed error rate has been far more volatile than we thought possible,” Barton said during the call. He later added that “fundamentally we have been unable to predict future pricing of homes to a level of accuracy that makes this a safe business to be in.”

As REALTORS®, a common issue arises when representing sellers or buyers is the Zestimate®️they sometimes rely upon to determine value for the property in question.

Invariably, we spend an inordinate amount of time explaining to our buyers and sellers that the Zestimate they see on-line has very little to do with the actual market value of a home.

The problem with Zillow’s algorithm is that while it can compare the size and age of a home using public records, location and lot size, it has an impossible task of sourcing sufficient details of a home for an accurate valuation.

For example, Zillow has no way of knowing if the homes being compared have been recently updated, and if so with what quality of materials.

Are the lots these homes sit upon all the same insofar as usability? A level ¼ acre lot is worth far more than a steep ½ acre lot but Zillow’s algorithm has no access to these important details, and it can’t differentiate between the two.

To sum it up, we tell our clients, “Zillow has never been to your home, or seen the inside. They can’t possibly know what your home is really worth—but it’s a fun app”.

The sad news is Zillow has taken down their own work force by their assumption they could use their quantitative analysis to predict home values.

The report ultimately states that Zillow plans “to wind down Zillow Offers, the company’s iBuying service in which Zillow acts as the primary purchaser and seller of homes.” CEO Rich Barton went on to say that the move should take several quarters and will also result in Zillow reducing its workforce by approximately 25 percent, according to a report Tuesday. 

Quote Source: Imnan Real Estate News

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance, or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Best of Tour 2.10.2015

BEST OF TOUR

Not to be confused with the Board of REALTORS “Best of Tour” award whereby agents try and coax or pressure their colleagues into signing a petition proclaiming their home the “Best of Tour”, our’s is based upon our personal impression after seeing all of the homes on tour and reporting back to you.

Today’s Best of Tour there were three stand outs:

Belmont:

Belmont’s inventory is still low but this one perked us up. A home on Belmont’s west side under $1,000,000? Ready to move in, this home is great for a first-time buyer tired of renting.

2014 Monroe Avenue , Belmont 94002   Status:  Active  Monroe

County:                San Mateo

Area:     362 – Belmont Country Club Etc. List Price:             $899,000

Beds:     2

Baths (F/P):        1

Apprx.Sqft:         1,150 SqFt (Tax)

Apprx Lot:           4,000 SqFt (Tax)

 

San Mateo:

904 Murphy Drive, San Mateo 94402       Status:  Active      Murphy Drive

County:                San Mateo                          Price:     $2,488,000           List:        02/06/2015

Class:     Res. Single Family

Beds:     5

Baths (F/P):        4 (3/1)

Apprx. Sqft:        3,910 SqFt

Apprx Lot:           11,970 SqFt

This home underscores why looks can be deceiving. From the outside it looks like just another track home but once inside it is anything but ordinary. From the open floor plan and expansive rooms to the wonderful rear yard. Truly a great find!

If that one is above your comfort zone there’s a home on the water in San Mateo which has been recently upgraded. Best part—you can water ski right from your back yard.

1765 Lake Street , San Mateo 94403         Status:  Active            Lake

County:                San Mateo          Orig Price:           $1,288,000           Original:               02/05/2015

Area:     413 – Parkside    List Price:             $1,288,000 MLS #:            ML81449598

Beds:     4

Baths (F/P):        3

Apprx.Sqft:         1,960 SqFt (Tax)

Apprx Lot:           8,280 SqFt (Tax)

 

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

You can find them on Facebook at https://www.facebook.com/Morganhomes and also find them on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.