Author Topic: Zillow Appraisal Numbers Way Too High  (Read 5941 times)

Eurotexan

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Zillow Appraisal Numbers Way Too High
« on: October 27, 2015, 08:21:15 AM »
For those of you with real estate as part of your net worth, how do you calculate the value?

I have always used Zillow which is linked to my Mint account. I knew it wasn't 100% accurate but I always thought it was a good ballpark number. Well how wrong I was! I recently got one of my rental properties appraised for a refinance and the appraisal number came back at $305k while the Zillow number has been around $385K for the last few months.

I know the value isn't really anything until I sell but it's kind of tough to see my net worth take this hit. I think going forward I might look at local comps every 6 months and judge the value myself.

Just wondering what ya'll do and whether you even include your property values in your net worth because the values are so hard to pin down?

CowboyAndIndian

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Re: Zillow Appraisal Numbers Way Too High
« Reply #1 on: October 27, 2015, 08:27:52 AM »
I have this issue.

I have a condo in Philly. When a new building showed up next door, the prices for hte condo jumped. This is because of the pricing algorithm of Zillow.

My primary home is a SFH, and the number seems to be quite accurate, since we have all SFH's around.

I hard code the price for the condo and let zillow provide it for my net worth.

ShoulderThingThatGoesUp

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Re: Zillow Appraisal Numbers Way Too High
« Reply #2 on: October 27, 2015, 08:29:45 AM »
Zillow numbers for my house are way too low - they price it lower than the house next door despite mine having more square feet and more bathrooms. I hard-code the value into Mint at the price I bought it for, because I'm pretty confident I could sell it for that very quickly.

MudDuck

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Re: Zillow Appraisal Numbers Way Too High
« Reply #3 on: October 27, 2015, 08:31:22 AM »
I think it varies. My house, if I were to sell it, would list at about $115,000 and probably sell for about $105,000. Zillow says it's worth $79,000. That is taking into account the recent sales of 2 disaster houses that were purchased in the last couple of years and my county's tax assessment (which declares my home to have 200 fewer square feet and one fewer bathroom). On the other side, within the same zip code, I looked at a home that Zillow declared to be worth $285,000... it ultimately sold for $210,00, which is exactly what I'd have offered.

I'd trust the local real estate agents to get this number close, by and large.

honeybbq

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Re: Zillow Appraisal Numbers Way Too High
« Reply #4 on: October 27, 2015, 09:52:23 AM »
I'd go on my own best estimate.

In my neighborhood in Seattle, Zillow is surprisingly accurate.

When I lived in St Louis, it was off by 50%.

Axecleaver

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Re: Zillow Appraisal Numbers Way Too High
« Reply #5 on: October 27, 2015, 01:26:34 PM »
Zillow is notoriously inaccurate. You have the right idea to do your own comps. That is the gold standard for estimating the value of your real estate. You also need to take the transaction costs into account, and recognize that these numbers are pretty volatile. As a non-liquid asset, it takes both time and money to turn it into a liquid asset.

Feeling badly about "losing" something you never really had is just human nature, but make an effort to be OK with this. Source: sold three houses, some gains, some losses.

Tyson

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Re: Zillow Appraisal Numbers Way Too High
« Reply #6 on: October 27, 2015, 01:29:56 PM »
I look at the Zillow amount and think "man, that can't be accurate", but then I look at what other homes have sold for in this area over the past 2 years and think "well, I guess it is - people are insane".

tonysemail

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Re: Zillow Appraisal Numbers Way Too High
« Reply #7 on: October 27, 2015, 01:35:47 PM »
yeah i ran into this problem with zillow too.
one of my fourplex gets priced as a SFH by zillow.

I switched to using the redfin estimator.
it automatically selects some comps and then you can manually delete bad ones or broaden criteria to include more.

Thinkum

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Re: Zillow Appraisal Numbers Way Too High
« Reply #8 on: October 27, 2015, 03:47:24 PM »
Dallas is a funky animal, that is for sure. Zillow will tell you the worth, but since Texas does not require the purchase price to be listed, it's a guessing game. Your best bet is to contact a realtor, hopefully you have one, and ask for some comps in the area.

In the end, it's just a number like our stock investments, that go up and down and mean nothing until we sell them.

cchrissyy

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Re: Zillow Appraisal Numbers Way Too High
« Reply #9 on: October 27, 2015, 03:57:42 PM »
My house is significantly higher in zillow than it should be.  I can say that confidently because of a point in time when it was appraised for a refi and a realtor ran comps to possibly sell it, and both appraisals came in at the same figure, whcih was a certain amount lower than zillow. There are reasons my house would be hard to sell, reasons zillow wouldn't know or account for.

So, for mint, I take zillow's number minus $x for how I know they overshoot, minus $x for cost to sell it.  So, I manually have to tell mint what my value is, and I do that twice a year at the most.

Frugal D

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Re: Zillow Appraisal Numbers Way Too High
« Reply #10 on: October 27, 2015, 04:20:48 PM »
In my neighborhood in Seattle, Zillow is surprisingly accurate.

Agree - the Seattle Zestimates are actually fairly close. I use the median value of Zillow, Trulia, and Realtor on a monthly basis and that seems to be a pretty good solution. Obviously, the number doesn't matter until you're actually going to list your house, but it's a good ballpark for NW purposes. 

RWD

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Re: Zillow Appraisal Numbers Way Too High
« Reply #11 on: October 27, 2015, 08:12:16 PM »
I used Zillow in my accounting software to estimate the value of our house. We ended up selling for about 10% more than the Zillow estimate (though after closing costs and fees they were about the same). If you suspect Zillow to be inaccurate then adjust it accordingly or use a different method of estimation.

IllusionNW

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Re: Zillow Appraisal Numbers Way Too High
« Reply #12 on: October 27, 2015, 08:45:19 PM »
We use the Zillow estimate in Mint for our primary residence, since as folks have said, we live in Seattle, so it is pretty accurate.  We don't use it for our five-plex since it is off by about $200k and over-inflates our net worth, especially since a five-plex is a lot harder to get rid of.  Instead, we just hard code in the purchase price we paid for it.  I'd rather underestimate our net worth than overestimate it.

thedayisbrave

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Re: Zillow Appraisal Numbers Way Too High
« Reply #13 on: October 28, 2015, 05:00:09 AM »
I'm a real estate agent.  Realtors HATE the Z-Estimate.  It is notoriously inaccurate even though it is an algorithm and is supposed to be right.  To estimate your home's value, look at recent sales in the area of similar homes, factor in any upgrade and Realtor costs, and then you'll have your net.

Easye418

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Re: Zillow Appraisal Numbers Way Too High
« Reply #14 on: October 28, 2015, 08:11:52 AM »
Zillow Estimate is low in my area.

 
I'm a real estate agent.  Realtors HATE the Z-Estimate.  It is notoriously inaccurate even though it is an algorithm and is supposed to be right.  To estimate your home's value, look at recent sales in the area of similar homes, factor in any upgrade and Realtor costs, and then you'll have your net.

+1.  I would let me real estate agent do it as I am paying them to do so.

phwadsworth

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Re: Zillow Appraisal Numbers Way Too High
« Reply #15 on: October 28, 2015, 08:24:38 AM »
Zestimates from Zillow are generally horrible.  In my area they are way too low, partially because they use gov't tax records and our local assessments are artificially low (long political reason), and also because I lived in a very mixed neighborhood so property values varied greatly door to door.  I think the Zestimate on my last house was about $250k, I had it under contract in 1 day for $412k.  Off by 65%, makes OP's 26% error look pretty good.

Zillow is fun for quickly searching for properties, and sometimes finding sales history (can also be really inaccurate), but do not use it for valuations.

edit to add:
Oh, I didn't answer the actual question:  How do I calculate value for use in net worth equation.  Uh, I don't?  Or, I ballpark it with what I know about my local real estate market, but I err heavily towards the side of: it's worth the amount of equity I have in it.  Houses are generally so non-liquid that it's tough to put their value in to cash terms.
« Last Edit: October 28, 2015, 08:27:53 AM by phwadsworth »

markbike528CBX

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Re: Zillow Appraisal Numbers Way Too High
« Reply #16 on: February 27, 2016, 10:51:48 AM »
I agree Zillow has issues.

house 2012 bought for 214k, now zillow 308k, nothing different about town, nieghborhood, house.

Even though I don't include the house in Net Worth, nor Am I selling, I find myself checking Zillow on a Weekly basis anyway.   Some of the reason is for entertainment, some because this is my first house purchase.

each time I check, I think of Warren Buffett, and the fact that such info is available.
Quote
There is one major difference between my two small investments and an investment in stocks. Stocks provide you minute-to-minute valuations for your holdings whereas I have yet to see a quotation for either my farm or the New York real estate.
Source:  Berkshire Hathaway Annual Report pg 19

Why do I keep looking?

Are these estimates useful? harmful? 

iris lily

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Re: Zillow Appraisal Numbers Way Too High
« Reply #17 on: February 27, 2016, 11:38:26 AM »
I changed the Zillow basics of my house to reflect 1) more square footage (it did not reflect the addition we put on 25 ears ago) and 2) a double+ garage.

Those changes barely registered. The price Zillow shows for my house is still too low, but that's ok, I have a better idea of the value than they do. And yes I do use it for net worth calculation.

My "net worth" calc is the value of our assets should we died today. That's what I attempt to capture.

« Last Edit: February 27, 2016, 11:40:15 AM by iris lily »