Zillow does not use a direct link to the multiple listing service. Which means that it relies on agents to manually enter listing information. For instance, if I put a new listing on the market I have to go and manually enter the data and multiple listing number into Zillow. If for some reason an agent doesn’t know to enter their listing maunually on Zillow (and believe me it happens!) then that “comparable” will not be available. You may have also noticed that such internet sites will not be accurate as to whether a hope is “active” (available to purchase) or “pending” and that is because, again, they are not linked to the multiple listing service.
Are Zestimates accurate? And if they’re off the mark, how far off? Zillow CEO Spencer Rascoff answered that they’re “a good starting point” but that nationwide Zestimates have a “median error rate” of about 8%.
Whoa! That sounds high. On a $500,000 house, that would be a $40,000 disparity — a lot of money on the table — and could create problems. But here’s something Rascoff was not asked about: Localized median error rates on Zestimates sometimes far exceed the national median,which raises the odds that sellers and buyers will have conflicts over pricing. Though it’s not prominently featured on the website, at the bottom of Zillow’s home page in small type is the word “Zestimates.” This section provides helpful background information along with valuation error rates by state and county some of which are stunners!
rural counties in California, error rates range as high as 26%. In San Francisco it’s 11.6%. With a median home value of $1,000,800 in San Francisco, according to Zillow estimates as of December, a median error rate at this level translates into a price disparity of $116,093.
So, if Zillow is NOT accurate are you hurting yourself when negotiating? You can if you take Zillow to be “the gospel”. It might create a mindset that anything off from this “Zestimate” is not acceptable. This is where I put in a plug for us hardworking Realtors! A good one is worth their weight in gold. Its their job to navigate you through what the home is worth despite what the Internet may tell you. Computers can expose you to lots of information but there is still nothing better than a “person” who you know and trust making sure you negotiate a fair price.