Are Zillow Zestimates Accurate???

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They can, but… MANY TIMES they ARE NOT!  I often get frustrated when I meet with clients and they “already know what my home is worth, I saw it on Zillow.” Even Zillow recommends speaking with a real estate agent vs. relying on their computer calculated data.

“The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.  We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:

  • Getting a comparative market analysis (CMA) from a real estate agent
  • Getting an appraisal from a professional appraiser
  • Visiting the house (whenever possible)”

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Listed below is Zillow’s disclaimer about their Zestimates.
The Zestimate® (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.  We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:

  • Getting a comparative market analysis (CMA) from a real estate agent
  • Getting an appraisal from a professional appraiser
  • Visiting the house (whenever possible)

Zillow also provides a Rent Zestimate estimated monthly rental price. Learn more about the Rent Zestimate.
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What’s the Value Range?

The Value Range, which is related to the Zestimate, shows the high and low estimated values of a home (e.g., the Zestimate may be $260,503, while the Value Range is $226,638 — $307,394). The Value Range can vary in magnitude depending on our historical ability to estimate similar homes. A wider range indicates less data are available or there is more volatility in the data. A smaller value range means we have lots of information to help compute the Zestimate and Value Range. When thinking about a Zestimate for a home, we believe it is critical to consider the width of the Value Range for that Zestimate as this is giving you an important clue as to the anticipated accuracy of the Zestimate. For the statistically minded, the Value Range is actually a 70% confidence interval.

My Zestimate is too low – or too high. What gives?

As mentioned previously, the Zestimate is a starting point in figuring out the true value of a house  The amount of data we have for the house affects the Zestimate accuracy. If your home facts are incorrect or missing, you can update your facts, which may affect your Zestimate value.

  • Price history and tax history: Check to see if your price history (the sale price and date you bought your home) and your tax history are correct on Zillow. Depending on the area in which you live, this can be a big factor in your Zestimate. If data are missing or incorrect, please let us know. Click “Edit” on your home details page, then “Report Problem With Home.”
  • Updates and remodeling explained: Most upgrade information is not in the public records, and is not easily quantifiable. We do not know about home updates and remodels unless they have been reported to the local tax assessor, so those items are not used in Zestimate calculations. While we do utilize user-submitted data that is measurable, (e.g., additional bedroom count, bath count, and square footage) there is no way for us to systematically gather and verify the type of remodel or build information where the value is based upon how the final product appeals to the buyer. Because of this, the algorithm can’t use that information.
  • Your home icon on the map: Region boundaries usually do not affect the Zestimate. That being said, if the home icon is in the wrong spot, either Zillow staff or the home owner can correct that. Move Home Instructions

I just changed the home facts. When will my Zestimate update?

Updates to your home facts will be factored into your home’s Zestimate, but, if the updates are not significant enough to impact the home’s value, your Zestimate may not change. In some cases, the altered data will affect the estimates slowly over about a two-month time period.  You will not see the full impact of the revision during the next estimate cycle. We refresh Zestimates for all homes three times a week. On rare occasions, this schedule is interrupted by operations associated with algorithmic changes or the deployment of new analytic features.

How does the amount of data affect it?

The number of transactions in a geographic area affects how much we know about prevailing market values of homes in that area.  More transactions provide more data and improve the accuracy of the Zestimate. Also, we use public and user-provided data for house attributes, and some areas report more data than others. The more attributes we know about homes in an area (including yours), the better the Zestimate. Remember that homeowners can also update their home facts if they feel they are incorrect or there are missing values, and the updates may affect the Zestimate value.

Is a Zestimate an appraisal?

No. The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.

How do we come up with the Zestimate and what’s in the formula?

We use proprietary automated valuation models that apply advanced algorithms to analyze our data to identify relationships within a specific geographic area, between this home-related data and actual sales prices. Home characteristics, such as square footage, location or the number of bathrooms, are given different weights according to their influence on home sale prices in each specific geography over a specific period of time, resulting in a set of valuation rules, or models that are applied to generate each home’s Zestimate. Specifically, some of the data we use in this algorithm include:

Physical attributes:    Location, lot size, square footage, number of bedrooms and bathrooms and many other details.
Tax assessments: Property tax information, actual property taxes paid, exceptions to tax assessments and other information provided in the tax assessors’ records.
Prior and current transactions: Actual sale prices over time of the home itself and comparable recent sales of nearby homes

Currently, we have data on 110 million homes and Zestimates and Rent Zestimates on approximately 100 million U.S. homes.*

Why do I see home values for the past?

We not only have Zestimates for homes now, we have used massive computing cycles to go back in time to generate historic Zestimates as well. Sound hard? It is, but it’s critical because it allows you to see how a home (or an area) has changed in value over the years.

Do you ever change prior Zestimates?

Yes. When major improvements to the algorithm are made, we do re-compute the historical Zestimates for affected homes. Our purpose in doing so is to provide consumers with the best estimate of historical property valuations. A historical Zestimate is not like a historical stock price, which doesn’t change after being recorded. A stock price is a record of an actual empirical event (and, as such, shouldn’t change). A Zestimate, on the other hand, is an estimate of the market value of a home, and can change when we have a better algorithm to estimate that value.

Note: We never allow future information to influence a historical Zestimate (for example, allowing a sale in 2009 to influence a Zestimate in 2008). Each historical Zestimate only uses information (e.g., prior sales, tax assessments) known prior to the date of a given Zestimate.

Does the Zestimate algorithm ever change?

Yes, a team of statisticians working every day to make the Zestimate more accurate. Since Zillow’s inception in 2006, we have deployed three completely new versions of the algorithm (2006, 2008 and 2011), but incremental improvements are made between major upgrades with new iterations being deployed regularly.

How often are Zestimates for homes updated?

We refresh Zestimates for all homes three times a week. On rare occasions, this schedule is interrupted by operations associated with algorithmic changes or the deployment of new analytic features

Are foreclosure sales included in the Zestimate algorithm?

No, the Zestimate is intended to provide an estimate of the price that a home would fetch if sold in a full-value, arms-length sale (e.g., the sale isn’t for partial ownership of the property or between family members). Our extensive analysis of foreclosure re-sales (typically, but not always, real estate owned, or REO, sales) supports the conclusion that these sales are generally made at substantial discounts to comparable non-foreclosure sales. As such, these sales are not used by the algorithm to produce the Zestimate. That is not to say that foreclosure re-sales do not influence the Zestimate at all, as foreclosure re-sales do suppress the sale price of surrounding non-foreclosure homes, and the price signals from these surrounding homes are used by the algorithm to produce Zestimates in that area.

Who calculates the Zestimate and how do they do it?

The Zestimate is created by an automated software process, designed by statisticians, and there is no ability for humans to manually alter the Zestimate for a specific property.

Does Zillow delete Zestimates? Can I get my Zestimate reviewed if I believe there are errors?

We do not delete Zestimates. We monitor customer feedback for systematic issues with the algorithm, but do not change individual Zestimates in response to customer feedback. The Zestimate is designed to be a neutral, unbiased estimate of the fair market value of a  home, based on publicly available and user-submitted data. For this purpose, it is important that it be based on identical information about homes (e.g., beds, baths, square footage, lot size, tax assessment, prior sale price) and that the algorithm itself be consistently applied to all homes in a similar manner. This ensures that there is no preference for some homes relative to others nor are there valuations based on facts that are not accessible to all Zillow users. Some homes may be very unique in ways that are not well captured by existing data, and the Zestimate may be less accurate on these homes. To provide more data on your Zestimate, you can post your estimated value and comment in the Owners Estimate section indicating your support for a different valuation.

I don’t know of any homes that have sold lately around me, how are you calculating my Zestimate?

The number of transactions in a geographic area affects how much we know about prevailing market values of homes in that area.  More transactions provide more data and improve the accuracy of the Zestimate. Also, we use public and user-provided data for house attributes, and some areas report more data than others. The more attributes we know about homes in an area (including yours), the better the Zestimate. Remember that homeowners can also update their home facts if they feel they are incorrect or there are missing values, and the updates may affect the Zestimate value.

Our estimating method differs from that of a comparative market analysis (CMA) done by real estate agents.  Geographically, the data we use is much larger than your neighborhood. Often times, we use all the data in a county for calculation. So though there may be no recent sales in the “neighborhood”, even a few sales in the area allow us to extrapolate changes in the local housing market. However, the data we gather does allow the models to incorporate the geospatial (neighborhood) patterns of recent sales.

How accurate is the Zestimate overall?

Our accuracy depends on the home data we receive; see our Data Coverage and Zestimate Accuracy table to see how accurate we are in your area. When it comes to unique homes (e.g., luxury mansions, unusual designs) we are less accurate in our Zestimates.

Can I remove the Zestimate while I’m selling my home (it should be higher)?

It’s important to remember that Zestimates track the market, not drive it. People ultimately have more fundamental reasons that drive what they choose to buy or not buy. Our data shows that half of all sales are generally above the Zestimate. To provide more data on your Zestimate, you can post your estimated value and comments  in the Owners Estimate section. The purpose of the Zestimate is provide data in a user-friendly format to promote transparent real estate markets and allow people to make informed decisions.

Can I use the Zestimate to get a loan?

No, you can’t. To get a federally guaranteed loan, a law called FIRREA (the Federal Institutions Reform, Recovery and Enforcement Act) requires an appraisal from a professional appraiser. Without limitation, lending professionals and institutions are prohibited from using the services in making any loan-related decisions. The Zestimate is our estimate of fair market value, a starting point for home buyers and sellers and anyone just plain interested in the value of houses. You can use it in judging market trends, and in calculating all sorts of things for your personal purposes. Click here to view our terms of use.

I have two Zestimates for my home? How do I fix this?

If you see two Zestimates for the same property, you can click on Edit, Report a Problem, then choose incorrect facts from the drop-down menu. However, if you are a homeowner with multiple parcels, and this is the reason there is more than one Zestimate for your address, we match the parcels on record with the county. If you officially combine parcels with the county, they will send us the updated information.

* Zillow Internal, March 2013

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Buying vs. Renting

buying vs. renting in Seattle

A First-Time Home Buyer? Here is the Home-Buying Process

A First-Time Home Buyer? Here is the Home-Buying Process

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Thinking of buying a home for the first time? Here is a synopsis of the home-buying process:

Hire a Real Estate Agent
This professional will be your guide from beginning to end and will assist in your home selection, purchase negotiations and closing. Work with someone who listens to what your housing needs are and is knowledgeable of your market area. Here are some of the activities your agent will coordinate with you:

  • Learn what home features are most important to you – condition of the home, age of home, design of home, quality of home features, etc…
  • Do you prefer a newly built home or a re-sale home?
  • Make arrangements to tour homes
  • For each home tour, provide details about the property
  • Discuss benefits and drawbacks of each home toured in relation to your needs
  • Provide current comparable market analysis of homes in the areas of most interest with information that includes: active listings, sold homes and pending home sales and sale histories of the home of interest
  • Insure you understand all of the terms and conditions of the purchase contract and other documents
  • Perform detail work and negotiations that arise from submitting your purchase contract to the seller
  • Insure all parties involved are performing their roles to bring about a smooth purchase transaction through to the closing

Qualification for Mortgage Loan – Determine Your Purchasing Power
Before beginning a home search, it is best to have pre-qualification for a mortgage loan so you can determine the amount you can afford as well as an estimate of what costs you will incur with the mortgage. Pre-qualification gives a buyer stronger negotiating power over non-qualifed buyers.

Your mortgage loan officer will also educate you on the different type of loans that are available and will help you choose the one that best serves your needs.

Location
Take time to figure out where you want to live. Factors may include:

  • Near to schools or work
  • Proximity to highways (or other transportation) and airport
  • Ambiance of the area: Does the neighborhood have well-maintained yards? Is it a walkable area? Is there a nearby business district or recreation area? Do you prefer a neighborhood that offers an outdoor pool and other amenities?

Make An Offer
Your real estate agent will assist you in making an offer on a home. This purchase contract will include the price you are willing to pay, along with any terms you have included (such as occupancy date and inclusion of appliances, to name a few). Many contracts also have contingencies to purchase such as a house inspection or financing.

Negotiations
Once the contract has been submitted, there may be a period of negotiation of price and terms. Your real estate agent will guide you through this back-and-forth process, and hopefully the result is an accepted offer.

Home Inspections
Once you have an accepted purchase contract, you will want to schedule a whole-house inspection to evaluate its structural and mechanical condition. This inspection reveals observable conditions and the professional inspector may make recommendations to consult a specialist (such as a roofer, engineer, etc.) You will receive a detailed report from the home inspection. Based upon the results of this report, you may have more negotiations with the seller.

Finalized Your Mortgage Loan and Obtain Insurance
At this point your loan will be going through its final steps with your loan officer. The mortgage institution will require an appraisal of the property. You will need to obtain home owner’s insurance. And, you will need to consider purchasing an owner’s title insurance policy to defend and protect your investment from future liens or disputes of title claims. Learn more about title insurance here.

Closing Day
An exciting day is when you sign on that dotted line and take ownership of your first home. Usually the sellers, buyers, their real estate agents and the closing officer meet together at an agreed upon time and location. Your agent will review all of the documents with you so there are no surprises at your closing. Congratulations, you are now a home owner!

What do I PAY in closing costs?

Money bagsYou are undoubtedly wondering what all are included in closing costs and how much is it going to cost YOU!

If you’ve never been through a real estate closing before, you might imagine convening around a large table where, at the end of escrow, you’re presented with an itemized list of big expenses required to close the deal.

But that’s not always the reality. While people still do meet around a table at the closing, today some closings happen virtually. The buyers and sellers can sign the necessary documents remotely and wire money for the closing.

More importantly, it’s unlikely that a buyer or seller would show up to closing without any idea of what their costs will be. If you’re new to real estate, or haven’t bought or sold in a while, here’s what you need to know about closing costs.

Buyers have more costs, but usually pay less than sellers

In a closing, both buyers and sellers have costs. Usually, the buyer is faced with more line-item expenses than the seller. For starters, most buyers are getting loans to make the purchase; many of the charges stem from the loan.

A buyer should receive a “Truth in Lending” statement early on in the sale process. This document spells out all the approximate costs the buyer will face when making the purchase, so there aren’t any surprises at closing. Some buyers use the “Truth in Lending” statement to shop for different lenders, interest rates and costs.

Aside from the costs of getting a loan or buying a home, some expenses, such as property taxes or homeowners association dues, are pro-rated and paid at the time of closing. For example, if you’re buying a home and you close toward the end of the property tax period, you’ll likely need to pay the balance of taxes upfront. The same holds true for pre-paid loan interest. If you close toward the end of the month, the lender may ask for the first month’s payment upfront.

Typically, buyers getting a loan will see some of the following costs:

  • Appraisal fee
  • Origination fee
  • Pre-paid interest
  • Pre-paid insurance
  • Flood certification fee
  • Tax servicing fee
  • Credit report fee
  • Bank processing fee
  • Recording fee
  • Notary fee
  • Title insurance

Be sure to go through these fees line by line with your mortgage professional to understand exactly what they are and how they apply to your loan.

Sellers pay the commission

For sellers, there are always fewer line items on an estimated closing statement. But the seller generally bears the biggest brunt of the fees: the real estate commission.

The commission is based on a percentage of the total sale price, so it tends to be the biggest fee. In addition to the real estate commission, sellers may have to pay the balance of their property taxes, if they haven’t done so already.

There’s some room for negotiation

All fees and charges can be negotiated during the real state transaction. For buyers, coming up with an extra 1 to 2 percent in closing costs can be a bigger deal than a $5,000 reduction in the purchase price. A credit for $5,000 to go toward closing costs will be a much bigger bang for your buck for the buyer. The price reduction won’t amount to much more than a few dollars per month over the length of the home loan. Saving $5,000 at the closing will be money right back in the buyer’s pocket.

Seattle Real Estate – 2014

Real Estate Predictions & the Hottest Housing Markets for 2014

A lot has changed in real estate in 2013. Home values have skyrocketed in many markets, mortgage rates have risen from their bottom and most recently, negative equity fell at the fastest pace ever.

Over the summer of 2013, Seattle experienced an enormous amount of buyers and a record low inventory.  There were not enough homes on the market for all the buyers!  This created bidding wars which often took home values up far beyond their original list price.  A few people in my office got their buyers $150,000+ or more than the owner originally hoped to get.

Sources predict 2014 to see a continuation of this positive trend. Take a look at four bold predictions for real estate and mortgages below, and the top 10 hottest housing markets for 2014.

Do you think our predictions will come true?

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Author:

Biking more and driving less!

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Commuters are driving less in 99% of the biggest U.S. cities

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new report shows a long-term change in how U.S. commuters in large cities are getting to work.
 
The U.S. Public Interest Research Group Education Fund put together government data on commuting in the largest U.S. urbanized areas — an area larger than a city but smaller than a metropolitan area — in its latest report. In 99 of the 100 largest U.S. urban areas, the report found the number of commuters using a private vehicle to get to work — either by driving alone or through carpooling — declined. 
 Interestingly, the cities where driving declined the most were also less impacted by the recession, the report says, based on unemployment, income, and poverty statistics.
 
“There is a shift away from driving,” said Phineas Baxandall, a senior analyst for the U.S. PIRG Education Fund. “The cities in this report are home to most of America’s population and are engines of the economy. Policy leaders need to wake up and realize the driving boom is over. Instead of expanding new highways, our government leaders should focus on investing in public transit and biking for the future.”
 
Other highlights from the study:
  • The average number of miles driven per resident fell in nearly three-quarters of America’s largest urbanized areas, from 2006-2011.
  • All 100 of the largest urbanized areas saw an increase in the number of people working from home, since 2000.
  • The proportion of households without cars increased in 84 out of the 100 largest U.S. urbanized areas, from 2006-2011.
  • The proportion of commuters bicycling to work increased in 85 out of 100 of the largest U.S. urbanized areas between 2000 and 2007-2011.

Read the full report here.

Photo: Flickr/Charles

— By Tyler Falk on December 3, 2013, 4:00 PM

Do I need to compromise when buying a home?

COMPROMISE: ask two different people and you’ll get very different reactions. download To perfectionists, compromise sounds like lowering standards, giving up or giving in. Find my perfect home! To peacemakers, compromise implies a willingness to be flexible to make sure all sides get their needs met. That said, there is a short list of items I believe home buyers should simply not compromise on – period. This is mostly from having seen so many cases of buyer’s regret in the years after closing, in cases where “taboo” compromises were made. Here are a few items I suggest you be a stickler on. 1. Commutability” of location. I have seen old house lovers buy mid-century moderns and learn to love them. I have watched country folk embrace urban living and vice versa. But never have I seen someone who wanted to be less than 10 minutes from work buy a home an hour’s drive away and have the commute grow on them. Walk score in my neighborhood. Click this link, click communities, and find your walk score! http://www.aspireseattlebellevue.commar8030Medium Some people simply don’t mind commuting. They might even like the mashup of having more suburban square feet, calm and quiet at home while working in a lively, urban environment. By no means am I suggesting that a long commute is a bad thing, by definition. But if you’re the type of person who cringes at the prospect of taking a train, bus, or bike or even a long morning and afternoon drive, and you know this at the start of your house hunt – don’t talk yourself out of it. Chances are slim that you’re going to grow to love a couple of extra hours of travel time added to your workday. Actually, chances are quite good that you’ll grow to hate them. 2. Saving and investing line items in your monthly budget. Sometimes compromise means deciding what things you can do without. When it comes to home buying, the lifestyle change of sacrificing things you were able to afford pre-ownership is so common there’s a name for it: “house poor.” (“House poor” really refers to this sacrificing behavior at its most extreme. Many homeowners would happily trade a few dinners out and the occasional new pair of shoes for being able to afford their home, hands down.) Home ownership usually requires a shift in financial priorities, and that may impact the dollar amounts you would otherwise put toward savings and investing, even in best case scenarios. If you believe that your home is a good investment, this can make total and complete sense. But the compromise home buyers should avoid is the total redirection of cash that was previously being invested or saved into the home’s monthly mortgage payment, décor and furnishing, remodeling or other upgrades. When you run your own personal monthly budget before you meet with the mortgage broker, don’t eliminate these line items entirely to inflate what you can afford to spend on a monthly basis. Being house poor is unpleasant. Being house poor and without any savings or retirement plan is terribly unpleasant. To boot, it actually endangers your home over the long term. Homeowners who have no cash cushion of savings are completely vulnerable to losing their homes if they experience even a temporary loss in income due to job loss or illness. 3. Home warranty. Do I need a home warranty? If you’re very flush with cash, the mere thought of going without a home warranty might seem crazy. But there are loads of buyers who are putting every cent they have into their transaction. In those sorts of situations, every line item on the closing statement gets scrutiny, and the home warranty is one some people consider striking out. Whatever you do, don’t compromise on having a home warranty. If you think you’re strapped for cash at closing, chances are good it will take you a while to get used to the new financial obligations that are part and parcel of home ownership. The mortgage payment is just the beginning; there’s also property taxes, homeowner insurance, HOA dues (if applicable), special assessments, utilities you might not have been paying as a renter (e.g., garbage and water), and all the little personal touches you want to put on the place. Over the years, many home owners reflect wistfully back on the days when they had the ability to call the landlord to fix anything that ever broke down. Truth is, even as a homeowner, if you have a home warranty policy, you do have a go-to number to call if many of your home’s major systems break down – and depending on the repairs you need, the policy might cover what ails your home. If you decide to forego a home warranty for whatever reason, you are putting yourself in a situation where anything that goes wrong after closing is 100% your responsibility, whatever the cost. Some buyers get confused, thinking the home warranty is redundant with their homeowners insurance, so they don’t need it. Don’t let confusion mislead you down a path of exposure: ask your agent to include a term whereby the seller pays for your home warranty right in your offer. Most sellers will. If yours doesn’t, compromise on the flat-screen TV before you compromise on the home warranty. I hope you have found this info helpful!! If you have any more questions, give me a call at 206.954.1099 or e-mail me at BrokerCandice@gmail.com I special in buying and selling homes in West Seattle, Magnolia, Queen Anne, Ballard, Capitol Hill, Mercer Island, Bellevue, Medina, Clyde Hill, Kirkland, Redmond, Issaquah, and Samammish! -Broker Candice