Zillow CEO Proves Zestimate Worthless

One of my favorite sources of industry information, Inman News, recently published this article about Zillow CEO Spencer Rascoff selling his Madison Park home in Seattle for 40% less than its Zestimate.

Forty percent?

You read that right- his own company’s Zestimate (or AVM, automated value model) of his own home was $1.75 million on the day it sold for $1.05 million. As I write this post, the online portal has ‘market value’ at $1.58 million, or 50% higher than the recent sale price.

Zillow admits its Zestimate to have an average error of 7.9% nationally. As I wrote in this post months ago, Zillow admits in Kitsap County their online valuation tool has an average error of 20%.

Twenty percent average error in Kitsap County? Yep- twenty percent!

What’s worse for consumers, many of whom have come to believe that estimate to be THE value of their home, it’s even tougher to put an accurate value on a luxury home. Because these properties have “non-quantifiable facts” unlike the widgets of suburban subdivisions, the value of these properties is impossible for a computer to accurately evaluate.

Not only is Bainbridge Island full of luxury properties, but even some median and under-median valued homes can be considered luxury for Kitsap County. And in this market, there are too many intangibles that contribute to value- location, building site, view, floor plan, overall condition, one of a kind architectural style, quality of construction materials and interior finishes. It’s very rare for two homes to really qualify as similar. Even within the neighborhood developments in Winslow, some homes have had over $100,000 in upgrades, while others have that same amount in deferred maintenance.

To get a true understanding of a home’s value, determined by how its attributes compare to recently sold homes meeting similar criteria, consumers are smart to rely on the expertise of a REALTOR© who hasactually stepped foot in all the properties used as comparable sales.

This is why I find it crucial to my success that I see every home for sale on Bainbridge Island on the weekly Broker’s Tour. In other words, I walk through every home for sale on the island and can tell you how yours compares. It is quite possible your potential buyers will also have walked through these homes and will be making their own comparisons that will be reflected in their offering price.

When you ask me to complete a CMA (comparative market analysis) for you, I will be able to thoroughly explain how your home’s features match up to recent comparable sales. I love computers and the efficiency they bring- but home owners will always need the human component to balance the art and science of pricing your real estate.

And the online portals’ algorithms just can’t do that.

To arrange a time for me to step foot in your home and be able to provide you with a complete Comparative Market Analysis, contact me at jason@mrshutt.com or 206.399.3641.

Copyright 2016