Why is Zillow skewed?
Since my last post, Zillow has improved a bit in terms of showing the near ok valuation for some properties, but for others, it's way off.
Here's why? It seems like it relies a lot on the last sale of the property instead of anything else. If a propertay hasn't been sold in last 2-4 years, its value is going to be very low in Zillow, while if you compare a similar property which has sold recently, Zillow's estimate will come out to be slightly more than the sale value taking in the account that real estates would generally go up....
Lot of people are now starting to rely on this information, but they don't quite understand that zillow's estimates could be way off.
A recent example is Belltown, Seattle. I'm trying to sell my condo which I've had for 2.5 years. Zillow shows a value of this place to be $488k. While other properties which were sold in last 6 months, zillow's estimate is higher than the sale price.
Now consider the units which are on NWMLS for sale, and aren't sold yet. One unit is listed at $550k while it's zillow valuation is $429k. The other one is listed for $760k and it's Z-value is $641k. Considering that most of the units are sold within 97%-100% of their sale price, this is totally wrong.