Asking price vs Zillow price (2024)

This question is about a close friend's house hunt experience.

Are Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

Zestimate accuracy is VERY location dependent.

See here: https://www.zillow.com/z/zestimate/

511east wrote: ↑Sun Feb 26, 2023 9:58 amAre Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

Neither Zillow nor the seller set the price a house sells for. A buyer will set the price. The seller can ask for whatever price they want, but a the house will only sell for what a buyer is willing to pay. This is the most important point to remember.

For example, sometimes a seller will list a house a little low in order to generate a bidding war, hoping that two or more buyers will bid higher and raise the sale price.

Zillow estimates are generally based on what their algorithms determine to be recent comparable sales. If house prices are declining it is possible a house sold in March 2023 might sell for less than a comparable sale three or six months ago using a metric like $ per square foot.

Zillow estimate means nothing to me.

Look at the recent sale prices for similar houses / area and you get a better picture while keeping in mind the trend of the local market (prices rising or falling). One hint is if you see sellers dropping their price since initial listing.

511east wrote: ↑Sun Feb 26, 2023 9:58 amThis question is about a close friend's house hunt experience.

Are Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

Zillow has a lot of problems. They don't do a good job accounting for the quality of the house, especially if there have been recent renovations. They don't understand less-than-arms-length transactions (e.g. a parent selling to their child for below market value). They also seem to struggle in a rapidly-changing-interest-rate environment, which is what people are seeing now. If the comps were sold when mortgage rates were 5% and now they are 6%, that's going to put a dent in the sales price.

I believe Zillow takes local sales, divides by square feet then multiplies that by the square feet of a house in question.

One case in particular with concrete, real market value. DW's aunt went into a nursing home and with our help, we sold the aunt's house. Zillow said it was worth $295k. I laughed at that as I called the house a pile of asbestos held together by lead paint and knob and tube wiring. The aunt was a hoarder and it took a lot of work to go through the whole house and separate junk from valuable things like random envelopes with $300 cash. The house was sold "as is" to a family of contractors for $135k, which actually amazed me. So Zillow was way off there.

You could use Zillow for trends. My own house showed a drop of 11% in one month. This tells me that likely because of interest rates going up, it's worth less than back when rates were low.

To sort of emphasize how little Zillow does to be accurate, they have a picture of my "house" which is a picture of a bunch of bushes and trees on a side street that borders the side of my property. Google maps was off at one point because my house is closer to this street than to the street my driveway goes to. When my house was built, that other street didn't exist. It was a bunch of woods and lots of wild blueberry bushes. So I'd laugh that they have a $750k value on a bush.

511east wrote: ↑Sun Feb 26, 2023 9:58 amSo if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow?

There's no "correct" price. The market price is what someone is willing to pay for it.

I am not aware if there is an undisclosed problem with the house.

-Randy Bo Bandy

511east wrote: ↑Sun Feb 26, 2023 9:58 amAre Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

Maybe, and sometimes, more or less.

The way to use Zillow is to look at recent sales of similar houses. Information on prior sales is accurate (absent errors, and the odd house transferred between relatives, divorces, etc. etc.)

Unfortunately there is no substitute for actual thinking guided by experience. Until our AI overlords take control, that is.

pshonore wrote: ↑Sun Feb 26, 2023 10:40 amThe last time I looked, Zillow was adding finished basem*nt sq footage into total sq footage. That can skew some numbers significantly.

And yet, for my house, they don't include the addition that was built by the prior owner!

511east wrote: ↑Sun Feb 26, 2023 11:09 amHow does zillow know the many details about a house, ie, if kitchen/baths are updated, or if it's been painted, or new something added?
Does the owner actually feed the info into zillow, or its taken from somewhere?

Zillow does not know that type of information so it is not taken into account in a Zestimate. Having owners self report information like this would lead to other problems like not being truthful.

toddthebod wrote: ↑Sun Feb 26, 2023 10:45 am

pshonore wrote: ↑Sun Feb 26, 2023 10:40 amThe last time I looked, Zillow was adding finished basem*nt sq footage into total sq footage. That can skew some numbers significantly.

And yet, for my house, they don't include the addition that was built by the prior owner!

I believe... at least in the past... on Zillow you could register as an owner of a property and request they correct quantitative data innacuracies like this (i.e. beds/baths is wrong, SQ foot is wrong,etc)

but you can't say "hey my house is worth more than that, or look at my granite countertops/new carpets, etc"

my opinion is that Zillow tends to trail the market slightly because its based off of closed sales data that might be 2-12 months old...

so in a rising market the Zestimate is low, in a falling market the zestimate is high, etc... which probably makes it particularly tough to rely on in a turning market.

privateer79 wrote: ↑Sun Feb 26, 2023 11:17 am

toddthebod wrote: ↑Sun Feb 26, 2023 10:45 am

pshonore wrote: ↑Sun Feb 26, 2023 10:40 amThe last time I looked, Zillow was adding finished basem*nt sq footage into total sq footage. That can skew some numbers significantly.

And yet, for my house, they don't include the addition that was built by the prior owner!

I believe... at least in the past... on Zillow you could register as an owner of a property and request they correct quantitative data innacuracies like this (i.e. beds/baths is wrong, SQ foot is wrong,etc)

but you can't say "hey my house is worth more than that, or look at my granite countertops/new carpets, etc"

They seem to have changed that. Maybe if you list your house you can make edits, but when I click edit facts, it says, "for certain off-market houses, we have disabled this feature..."

Most strangely, they list the house as a three bedroom, but then in the detailed listing they include all five bedrooms individually.

toddthebod wrote: ↑Sun Feb 26, 2023 10:18 am

511east wrote: ↑Sun Feb 26, 2023 9:58 amThis question is about a close friend's house hunt experience.

Are Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

Zillow has a lot of problems. They don't do a good job accounting for the quality of the house, especially if there have been recent renovations. They don't understand less-than-arms-length transactions (e.g. a parent selling to their child for below market value). They also seem to struggle in a rapidly-changing-interest-rate environment, which is what people are seeing now. If the comps were sold when mortgage rates were 5% and now they are 6%, that's going to put a dent in the sales price.

All the above.

stan1 wrote: ↑Sun Feb 26, 2023 10:03 amNeither Zillow nor the seller set the price a house sells for. A buyer will set the price. The seller can ask for whatever price they want, but a the house will only sell for what a buyer is willing to pay. This is the most important point to remember.

For example, sometimes a seller will list a house a little low in order to generate a bidding war, hoping that two or more buyers will bid higher and raise the sale price.

Zillow estimates are generally based on what their algorithms determine to be recent comparable sales. If house prices are declining it is possible a house sold in March 2023 might sell for less than a comparable sale three or six months ago using a metric like $ per square foot.

It's both buyer and seller. The buyer may offer XYZ but the seller might not accept XYZ.

I live in an end-unit condo. My neighbor has a middle-unit condo. Both condos are the same otherwise... except that I have more updated appliances/ mechanicals.

My condo has a higher Zillow estimate compared to my neighbor. That makes sense. But... my neighbor's Zillow Rent Estimate is $150/month higher than mine. I have no idea why.

Zillow is not an exact science.

--- Brian

Home prices are something that is difficult to figure out without knowing the area and condition of the home. I've owned 4 homes in my life and probably saw in person at least 20-40 homes before purchasing one in order to understand what you get for your money.

Often home prices depend on:
1. Square footage and lot size
2. Condition of the house which is something that you don't know w/o seeing the house in person. A photo might show everything is fine or conveniently leaves out photos of certain areas but the actual repairs could be quite poor in terms of workmanship or materials.
3. Location, location, location - Includes noise, safety, schools, amenities, etc.
4. Owner of home. Some people will ignore an agent's advice and just want it to be set at a given price. Often these end up on the market for many months. I've seen a few lately where the homes have been on the market for 6-8 months despite price reductions.

I've found Zillow to be pretty decent in the areas I've look at but home prices are complex. An over priced home often will have to sell for a below average price in the long run due to how long it has sat on the market and people start to figure it must be bad so they either avoid it, or will only make a very low offer.

We had an agent do a video walk through for us (she faced time us) on one home that has been on the market for a long time. Ended up looking pretty nice although some strange layouts and w/o seeing it in person myself or by an expert, the remodeling I wouldn't trust just via video. Will the new cabinets last ? Or will I be out $30K+ in 5 years.

pshonore wrote: ↑Sun Feb 26, 2023 10:40 amThe last time I looked, Zillow was adding finished basem*nt sq footage into total sq footage. That can skew some numbers significantly.

Where I live, the County includes unfinished basem*nt square footage for tax purposes. Of course, when we got a heloc for a remodel that same basem*nt was not included in the appraisal.

511east wrote: ↑Sun Feb 26, 2023 9:58 amThis question is about a close friend's house hunt experience.

Are Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

The buyer and seller agree to the sales price of any house. Sometimes, by shear happenstance, Zillow, Redfin and other like software happens to get it "right".
I would be willing to bet the percentage of time the software comes within a few thousand of an actual selling price to be in the single digits.
Don't you find it interesting that Zillow doesn't publish their accuracy numbers? And even if they did, on what are they basing that accuracy?

511east wrote: ↑Sun Feb 26, 2023 9:58 amThis question is about a close friend's house hunt experience.

Are Zillow estimates accurate? I see a Zillow estimate that is 90k higher than asking price for a house, why would that be?

So if there is a 90k difference between the asking and the zillow numbers, is the seller correct or is zillow? Why would seller be asking for less, is there an undisclosed problem with the house? Seller seems to be in a hurry.

The only thing that matters is what a buyer will pay a seller at the time and place of the transaction. Zillow at that point is irrelevant.

If you use a realtor they will suggest a listing price.

As a savvy advisor to your close friend, you will suggest to him/her that he/she analyze all comparable houses currently for sale to see if he/she likes the price suggest by the realtor.

In other words, your close friend needs to do his/her own due diligence and homework.

It's very accurate for my neighborhood. There's only a few variations of housing plans and Zillow seems to correctly adjust for lot sizes. Also, the market is active here, so there's lot of data on actual sales.

In a slow market with lots of custom homes, I would guess its accuracy is not as good.

Recently sold my house. I initially set the asking price based on realtor comparisons with local recent sales. This was near the Zillow estimate. After the house was listed, the Zillow estimate magically snapped to exactly the asking price. I ended up lowering the price after 30 days with no offers. The Zillow estimate again snapped to exactly the asking price. Then once the sale completed, it snapped to exactly the final sale price.

Further, my neighbor's houses were both larger than mine with larger lots. For as long as I have been looking at Zillow, one house always had a lower Zillow estimate than mine, while the other always had a Zillow estimate higher than mine. As far as I can tell, there is a very high correlation to the last sales price of the property. My lower-priced neighbor's house hadn't been on the market since 1955, while my higher-priced neighbor's house had last sold approx. 2010, and I had bought my house in the early 2000s.

So I would not put a lot of faith in the Zillow estimate. Comparable sales are a better estimate.

tooluser wrote: ↑Mon Feb 27, 2023 7:04 amRecently sold my house. I initially set the asking price based on realtor comparisons with local recent sales. This was near the Zillow estimate. After the house was listed, the Zillow estimate magically snapped to exactly the asking price. I ended up lowering the price after 30 days with no offers. The Zillow estimate again snapped to exactly the asking price. Then once the sale completed, it snapped to exactly the final sale price.

Further, my neighbor's houses were both larger than mine with larger lots. For as long as I have been looking at Zillow, one house always had a lower Zillow estimate than mine, while the other always had a Zillow estimate higher than mine. As far as I can tell, there is a very high correlation to the last sales price of the property. My lower-priced neighbor's house hadn't been on the market since 1955, while my higher-priced neighbor's house had last sold approx. 2010, and I had bought my house in the early 2000s.

So I would not put a lot of faith in the Zillow estimate. Comparable sales are a better estimate.

Very interesting about how Zillow resets their estimate, good to know. Do you remember if the Zillow reset of the estimate happened on the same day of the price changes that occurred, or was it 1, 2 days later or a week later?

IMO, Zillow zestimates are only useful in subdivisions with lots of sales and houses of similar characteristics (as someone upthread mentioned, “cookie cutter” houses.)

Also keep in mind that there are a few states (10 total I believe) where the sales price of a house in not public information (for some of these locations, the price is just listed as “in consideration of $10”!). So Zillow is making up estimates based off the asking price, which is ridiculous. And for those that don’t believe me, trust me when I say the information in these states is not public. I was amazed after having bought houses in CA and CO to move to two of these states and learn that even the county government sites don’t have the info. Then you read about the tax appraisal process in these areas… It’s a whole different process than in states where the sales price is used as part of the tax appraisal. The county tax appraiser basically has to do a comparative market analysis to determine what they think your house sold for, and you can then challenge the tax appraisal if they are too high (by using your sales documents). Fascinating

511east wrote: ↑Sun Feb 26, 2023 11:09 amHow does zillow know the many details about a house, ie, if kitchen/baths are updated, or if it's been painted, or new something added?
Does the owner actually feed the info into zillow, or its taken from somewhere?

I think you pretty much answered your own question regarding Zillow's accuracy or lack thereof...

Both Zillow and Redfin have issues but they aren’t made to be a substitute for an accurate appraisal.

The one thing I’ve noticed is that they retroactively adjust their estimate history to be in line with current estimates.

My house went from $1.2m to $1.7m between Sept 2021 and October 2021. It then went to $2.8m on Jan 2022. However the historical line chart shows the value never being below $2.4m as far back as 2019.

Actual value of the house is probably around $2.2m. The original estimate was always much too low and the current estimate is much too high.

They certainly hit a snag with their foray into purchasing at their Zestimate and ended that offering. They seem high, and their geographical area on which Zestimates are based are one of the apparent keys in the figure. Locally, for example, it includes wide swaths of upper income areas that seem to inflate figures since there are very wide variations in selling prices locally. This is according to a Realtor who sold our last house.

Tim

Nowizard wrote: ↑Mon Feb 27, 2023 9:18 amThey certainly hit a snag with their foray into purchasing at their Zestimate and ended that offering. They seem high, and their geographical area on which Zestimates are based are one of the apparent keys in the figure. Locally, for example, it includes wide swaths of upper income areas that seem to inflate figures since there are very wide variations in selling prices locally. This is according to a Realtor who sold our last house.

Tim

Indeed, both Zillow and Redfin entered the home flipping business using their quantitative analysis algorithms. Both were unsuccessful. Both had to shutter those businesses. This was during a bull market in real estate. Tells you all you need to know about real world accuracy of these algorithms.

Where we house-hunted 18 months ago, Zillow proved EXTREMELY useful to locate listings, get a good feel thanks to pictures, manage our short-list, identify open house schedules, etc.

We didn't trust it one bit when it came to numbers though, it notably got the property taxes all wrong on the property we ended up buying... As to the selling price, well, it is what the seller sets it to, then it's up to you (and a half-decent buying real estate agent if you can find one) to figure out what's your willingness to pay... Zillow only provides a coarse value estimate, can't ask for more.

siamond wrote: ↑Mon Feb 27, 2023 9:39 amit notably got the property taxes all wrong on the property we ended up buying...

Would that be because the tax assessment value changes the instant you buy the house... to the value you paid for it?

Zillow will give you ballpark only. It can distinguish a 200-300K property from a 800-900K one. It cannot reliably distinguish an 800K property from a 900K one. There are too many factors involved that cannot be captured by an automated approach, especially in neighborhoods with older homes.

However, their "recent sales" prices are generally accurate and can be quite helpful.

pointyhairedboss wrote: ↑Mon Feb 27, 2023 9:43 am

siamond wrote: ↑Mon Feb 27, 2023 9:39 amit notably got the property taxes all wrong on the property we ended up buying...

Would that be because the tax assessment value changes the instant you buy the house... to the value you paid for it?

Hm, I don't think this is how it works where I live. Zillow also got the history wrong, by the way.

Zillow has no idea what the condition of the house is. There are also other issues of potential data inaccuracy.

In my case the neighbor's finished basem*nt was listed as "living space" on Zillow but the finished basem*nt in the house I bought was not included as living space. So we had two identical houses with the same builder different Data in Zoho.

Zillow does not know what updates were made to the home, the age of last roof replacement, pressure on seller to complete the sale, etc.

Therefore, the estimate easily could be off up to 25%. Their figures tend to be more accurate in a larger cookie cutter tract neighborhood with many nearly identical size homes on similar size lots, where you might assume several recent sales would average out between updated and non updated properties. Custom home neighborhoods with large homes built at different times would reflect estimates that are less accurate.

511east wrote: ↑Sun Feb 26, 2023 11:09 amHow does zillow know the many details about a house, ie, if kitchen/baths are updated, or if it's been painted, or new something added?
Does the owner actually feed the info into zillow, or its taken from somewhere?

It doesn't. It might know if a big addition was added to the home, the addition had an approved permit and has been reflected in property tax assessment, but that's about it. Otherwise I think it simply uses recent sales, square footage comparison, purchase price history, lot size, number of beds/baths, and plugs it into an algorithm that spits out a number.

Shackleton wrote: ↑Mon Feb 27, 2023 8:31 amIMO, Zillow zestimates are only useful in subdivisions with lots of sales and houses of similar characteristics (as someone upthread mentioned, “cookie cutter” houses.)

Also keep in mind that there are a few states (10 total I believe) where the sales price of a house in not public information (for some of these locations, the price is just listed as “in consideration of $10”!). So Zillow is making up estimates based off the asking price, which is ridiculous. And for those that don’t believe me, trust me when I say the information in these states is not public. I was amazed after having bought houses in CA and CO to move to two of these states and learn that even the county government sites don’t have the info. Then you read about the tax appraisal process in these areas… It’s a whole different process than in states where the sales price is used as part of the tax appraisal. The county tax appraiser basically has to do a comparative market analysis to determine what they think your house sold for, and you can then challenge the tax appraisal if they are too high (by using your sales documents). Fascinating

1. Yes, our house is one of several dozen in a small area (same 'niceness', 'local amenities') built mostly within a <20yr period (from early 1880's), stone/brick rowhouses with little land other than under the house. Square footage varies considerably (2, 3 and 4 story, different widths) but that works pretty well as a gauge, but of course there's variation in degree of original detail vs. renovation.

2. That is interesting. Here actual sales prices are public record, but last general property tax assessment was in 2013, the one before that 1986. They do however add to your assessment for major renovations, so that prevents large distortions in the Z/R numbers due to recent renovations. Also the ones that are multifamily (most were at some point in the 20th century, ours SFH 1901> 2 fam by 1940>3 fam by 1980>SFH shortly after that) are almost always in worse shape and it seems to know not to feed multifam comps into the SFH estimates.

Bottomline, Z/R average comes out consistently close to my amateur comp sales analysis. Also I figure our place is a little undervalued by looking at either Z/R or comps because it's super on original detail which shows up less in either measure, or the 2013 assessment, vs. major renovation which is again more or less reflected in special assessments (people have put $1mil into these places in one go in extreme cases, we've put $120k in renovation in 30 yrs though some was DIY). If you're actually selling though, you're paying a realtor to know more than Z/R algorithms and selling without a realtor is a different topic. But it's also true I believe that if you're in the unfortunate position of Z/R low balling your place that's a problem, because people look at these sources and don't expect to pay more 'than it says'.

Zillow estimates are designed to get you on the website.

Have your friend use a local Buyers Agent. They can look at sales (backwards view) and current listings (forward view). They also have more information at their disposal than Zillow regarding features and upgrades to determine market value.