Arn Cenedella

Zillow estimates? How accurate are they?

How accurate are Zillow estimates?

As a test, I decided to check the Zillow estimate of my own home in San Carlos.

My home is a 3 bedroom 1 bath home of a little over 1200 square feet.

It is located in the desirable White Oaks area of San Carlos and is located on one of the best streets (only 2 blocks long – large lots – no thru traffic) in the White Oaks neighborhood.

The Zillow estimate was $794,087.

I know I could put my house on the market and sell it tomorrow before NOON for that price !!

I looked at the 50 comps used my Zillow.

The average price per sf for these comparables was $698 per square foot.

Of these 50 comparables used by Zillow:

22 were either in Redwood City (lower average sales price than San Carlos) or on very busy streets like Alameda de las Pulgas or Brittan Avenue.

Of the remaining 28, 9 of the comparables houses were over 1,500 square foot in size.

Using larger homes to value a smaller home on the basis of cost per square foot underestimates the value of the smaller home because such a large percentage of the overall value of the property is in the land. If a price per square foot number is accurate across all size homes then a 1,000sf home would be worth one half what a 2,000sf home would be (in the same neighborhood) and I think we all know that isn’t true.

Eliminating homes in the wrong city or on busy streets and eliminating homes that are 25% larger than the subject property results in a price per square foot of $750 -  an 7.4% increase in price per square foot. An 7.4% increase in the zillow estimate would result in a market value of approx. $850,000 – still low but closer to the true value.

Zillow provides some useful “down and dirty” information but really is only a broad brush estimate of value. It is a starting point only. Condition, degree of updating and remodel, school district, overall appeal, and specific locational factors are not considered.

For an accurate estimate of your home’s value, contact an active real estate agent in your neighborhood. He or she will know the recent sales and the competition. The value analysis can be fine-tuned based on this expert local knowledge.

A colleague of mine in the Piedmont area Julie Joyce Coldwell Banker in her homes across the bridge blog did a similar study and found that Zillow included comparables in another city and in an inferior school district.

Nothing beats local knowledge !

This entry was posted on Monday, January 7th, 2008 at 8:28 pm and is filed under Real Estate, Real Estate Data, zillow. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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