Zillow Comparison to Actual Sales

[Bama Bayou]

Just for kicks, I decided to compare recent sales in two of my local markets to Zillow estimates. The sales data comes from the MLS using all the SFR sales between 4/12/2008 and 5/12/2008 in zip codes 36561 and 36542. They were not cherry picked to make Zillow look bad, no reason to. A total of 17 sales took place and Zillow was able to "Zestimate" 11 of them. Here are the results. They were off actual sales price by an average of 51%. The range was 10% to 136%. All were over valued-not a single one had a Zestimate less than actual sales price. They are not using tax assessor values in this market.

As a former AVM developer, me thinks that they need to "tweak" their model a bit. A stupid dog could do better than this.

5531 Bear Point Avenue, 36561, closed 4/23/2008 for $125,000.
Zestimate: $180,000
Zillow over values 44%

5587 Pensacola Avenue, 36561, closed 5/5/2008 for $127,625.
Zestimate: $206,000
Zillow over values 61%

24722 Gulf Bay Road, 36561, closed 4/23/2008 for $131,000.
Zestimate: $206,000.
Zillow over values 57%.

2363 Twin Pines Circle, 36562, closed 5/2/2008 for $132,000
Zestimate: $223,500.
Zillow over values 69%

18788 Chelsi Lane, 36542, closed 5/12/2008 for $169,900.
Zestimate: $212,000.
Zillow over values 25%

5525 Ornacor Avenue, 36561, closed 4/18/2008 for $180,000.
Zestimate: $197,500.
Zillow over values 10%.

1209 West Lagoon Avenue, 36542, closed 4/17/2008 for $185,000.
Zestimate: $437,000.
Zillow over values 136%.

356 Savannah Lane, 36542, closed 4/25/2008 for $200,000.
Zestimate: $228,500.
Zillow over values 14%.

4697 Osprey Drive, 36561, closed 5/2/2008 for $284,900.
Zestimate: $419,000.
Zillow over values 47%.

4117 Harbor Road, 36561, closed 5/8/2008 for $295,000.
Zestimate: $372,000.
Zillow over values 26%.

4336 Hwy 180, 36542, closed 4/18/2008 for $589,775.
Zestimate: $1,012,000.
Zillow over values 72%.

 

[TEL2002]

Boy is that system screwy...what happened to the values on Ornacor and Savannah streets. Me thinks they had better take their AVM in for a tune up. Those overvalues are way too low.

 

[Bama Bayou]

Funny TEL, I guess they won't get as much web traffic unless they tell people what they want to hear. Which is why I got out of the AVM development business.

 

[Elliott]

We all know from Zaio's press releases that 'better technology' is the only
way to go....Zillow is similar positioned to replace us 'appraisers'. When you
have Dems running congress, $300+ Billion should bail out the $1 Trillion sub-prime
mess.

On the editiorial page of the WSJ today....

The Biggest Housing Losers
May 12, 2008

You may not know it, dear reader, but Congress is playing you for a sap. During the housing mania, you didn't lend money at teaser rates to borrowers who couldn't pay, or buy a bigger house than you could afford. You paid your bills on time. As a reward for that good judgment and restraint, Barney Frank is now going to let you bail out the least responsible bankers and borrowers.

The Massachusetts Democrat's housing bill passed the House Thursday, and it makes us wish we had splurged like so many others. In the name of helping strapped home buyers, Mr. Frank is giving lenders a chance to pass their worst paper onto Uncle Sugar. If both borrower and lender agree to participate, lenders can accept 85% of the current appraised mortgage value and in return get to dump up to $300 billion of those loans on the Federal Housing Administration (FHA). Guess which loans they are likely to dump?

The plan seems to get more generous by the week, at least if you're an ally of Mr. Frank. The monster he brought to the floor Thursday runs to hundreds of pages. State governments receive authority to issue $10 billion in tax-exempt bonds to subsidize home purchases and to help subprime borrowers refinance.

In a sop to builders, Mr. Frank also expands the low-income housing tax credit, and he creates a new refundable credit for certain home buyers. To help defray the cost to the Treasury, Mr. Frank raises taxes on multinational companies by delaying a scheduled reform. A law set to take effect this year would expand firms' ability to claim foreign tax credits and thereby avoid double taxation. Mr. Frank would put it off for another year.

 

[Workbox]

What most must realize now is that they have idiots doing AA-AVM's. That is what Zaio is doing and so is TransUnion.

 

[Kulzer and Co]

Thank goodness Zaio is not in the AVM game. Those things are screwy. Better technology, here we come!

 

[TJSum]

Thank goodness Zaio is not in the AVM game. Those things are screwy. Better technology, here we come!

Lets say Zaio is superior in technology to AVM's, not to debate that issue here, but lets concede the point for the sake of a larger question to ponder.

With many AVM's to choose from, will the lenders go with the AVM number that makes their deal work, or with the AVM with the proposed "better technology". Using the past as a guide, good luck with that. My look into the future sees lenders shopping values to the various AVM's and the Zaio's of the world until they find a number they like. m2:

 

[Kulzer and Co]

Perhaps some shady lenders/brokers will, but at the end of the day a USPAP compliant 2055 will always trump an AVM. As the noose tightens on the mortgage industry watch for more underwriting to require a 2055 appraisal where an AVM would have once been considered acceptable. So, as long as Zaio can offer the speed of an AVM and the reliability of an appraisal, it seems they will be well positioned to provide that service.

 

[Fred]

Perhaps some shady lenders/brokers will, but at the end of the day a USPAP compliant 2055 will always trump an AVM.

Except there is nothing stopping the person developing the appraisal from using an AVM in the process.

Thank goodness Zaio is not in the AVM game.

Of course they are.

Veros also provides users access to Zaio's AVM, i-Val Report[TM].
http://www.allbusiness.com/company-activities-management/management-risk-management/7748030-1.html

Zaio's AVM software is also referenced in the zone sales contract.

 

[Elliott]

Kulzer said, Thank goodness Zaio is not in the AVM game.

Mr. Santora responded, Of course they are.

http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2006/11/when_is_an_avm_.html

Of course they are.