Back in October I had the pleasure of attending FinCon, the financial bloggers conference. While all of the keynotes and smaller presentations were excellent, one of the best parts about FinCon was simply getting a chance to meet a variety of people across the financial blogosphere. And one of my favorite places to meet new people at FinCon was the daily 6am run around the St Louis Arch.
I find that you get to see a very different (and more awesome) side of most people when you wake up before dawn to head out and sweat together for 30-45 minutes. Maybe it’s just me, but the conversations seem more honest and less promotional and you also end up with a very different cross section of people. Among others, I ran with interesting folks like Todd behind The Financial Mentor, Jim from The White Coat Investor, Tanya from Budget and the Beach, and Lauren from Zillow. And it was my conversation with Lauren that provided the impetus for this post.
Are You Familiar With Zillow?
When Lauren introduced herself and asked if I was familiar with her employer, it became pretty clear that I have no verbal filter in the pre-dawn hours.
“Yes, I’m pretty familiar with Zillow. Actually we get a decent amount of search traffic to our site for the search term ‘zillow sucks‘.”
Ever the professional, Lauren said, “Tell me more.”
So I told her the basics. About how we’ve got a modest real estate investment portfolio and live in an area with fabulous access to public records, but where prices have decreased and then increased dramatically over the last 5 or 6 years. As a result, I’ve watched our Zillow Zestimates (those are Zillow’s algorithmically determined property valuation estimates) bounce all over the place and haven’t found them to be very accurate.
I told her that in general, we’re a big advocate of every homeowner understanding the basics behind how to figure out a home’s value and that it’s a process that most people should be able to do on their own. And really, since you likely know the details of your own house and your own neighborhood better than an algorithm combined with a database of public records, taking the time to perform market comps yourself will probably give you a more accurate answer than any algorithm could.
When I was telling Lauren some of the specific algorithm weaknesses I had noticed (like our multi-family dwelling being classified as two single family dwellings and how I noticed that our enclosed, underground pool and waterview didn’t seem to be included in the algorithm), Lauren told me something I hadn’t known before. “By adding to our data, you can help improve our algorithm and the accuracy of your Zestimate.”
Now it was my turn. “Tell me more.”
She went on to tell me how you can claim your home on Zillow, and then edit the information fields that Zillow uses in its algorithm. It might take a little time for the data changes to filter through to the Zestimate you see published on the site (and that gets imported into our mint account automatically). “Hopefully,” she said, “that will give you more accurate estimates.”
So I Staked Our Claim
I had to set up an account on Zillow, but then I was able to claim our properties and, exactly like Lauren said, edit the details of them.
- For our primary residence, I added our pool and waterview in the appropriate features fields.
- For the duplex, which had two entries (one for each unit), I marked one of the entries as multifamily, and the other I emptied out.
The entire process only took a couple of minutes and then I ignored it for a couple of months.
In short, the Zestimates got more accurate, but not perfect.
Right now, the Zestimate on our house is sitting at about $20K more than what I peg our home value at. Then again, I always discount my own initial estimates by about $20K because I know that any buyer would take one look at our ugly tile and assume it needed to be completely redone. Zillow wouldn’t have a good way of knowing that, so I’ll give it a pass. (But it’s a great example of how you know the weaknesses and strengths of your own home the best.)
For what it’s worth, our Zestimate used to be almost identical to a house a couple blocks over that is the same size and age as ours, but doesn’t have a pool or sit on a lake, and now it’s not. Which is as it should be. I think editing the data in this case allowed Zillow to give me as accurate an answer as can be determined algorithmically. (At least for now.)
The duplex Zestimate accuracy improved as well, but I think still errs on the high side. Here’s a map of the Zestimates around our duplex now. Ours is the one enclosed by the red square.
Prior to making the changes and distinguishing the property as multifamily instead of two single family residences, there were two valuation icons for our duplex, each one with a value of about $90K. (Much like the duplex immediately to the right of ours in the image above.) Now we’re down to just one valuation for the property, which is currently quoted at $159K.
From the most recent comparable sales of duplexes, though, this seems a bit high. My own spreadsheet puts our duplex valuation at about $135K* sold with renters in place. (We do have renters – and we even gave them Christmas gift cards again this year.) Duplexes with renters seem to sell for about a $5K premium right now.
So the Zestimate of $159K seems about 18% high to me, but it is definitely more accurate than having two $90K-ish values separately on the units.
I still think that calculating your own home value is a good exercise and not hard at all. But if you’re not going to take the time to do that, consider devoting a couple of minutes to “claiming” and “editing” your house on Zillow. By making the data on your own home accurate, you’ve at least got a better chance of Zillow’s Zestimate not being wildly inaccurate.
* This value will be updated on the January 2014 Balance Sheet.
Has anyone else claimed and edited their home info on Zillow? What do you use to value your property?