THE CHICAGO IL REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF VIEW OF A LITTLE WHITE DOG!
Well, before you know it, those Lazy, Hazy, Crazy Days of Summer will be back, and all of this Melting Chicago Snow will be gone. Can't be soon enough for me - I have a concrete sidewalk to spread across, and green grass to smell!
Zillow!
If you're a Chicago Homeowner, or have ever considered buying or selling a home in Chicago, you know this well-publicized consumer website. Since its debut here, during the boom market of 2006, many of our Team clients first checked the site before calling us for our opinion of value.
"We know our home value," some said. "We "Zillowed' it!"
Now, according to a study by an Academic Think Tank in Texas, as reported in the Chicago Tribune by Mary Ellen Podmolik, many of the Zillow Estimates for the sample it studied - over 2,000 homes in the Dallas TX Suburb of Arlington during 2006 - had their values grossly overstated.
The research found that 40% of the home values provided by the Zillow Proprietary Formulas - they call them "Zestimates" - were actually overstated in value by 10% or more. Less than one percent of the test sample had their home value under estimated. The entire study was published in last winter's edition of The Appraisal Journal, an industry trade magazine of The Appraisal Institute.
We might have suggested the same here in Chicago, as some of the "Zestimates" provided by our clients over the last few years have been very high, especially as many sectors of the Chicago Real Estate Market went into steep declines beginning late in 2006.
Professor Ron Rutherford, one of the authors of the study, selected Arlington TXbecause of its stable real estate market at the time, and because Zillow gave its estimates in that market "Four Stars" for reliability.
By contrast, the Internet Valuation Site gives Chicago a lower, "Good" Rating. Zillow says 70% of its home price estimates are within 20% of the likely or actual sales price, with a Median Error of 11.5%. This Median Error means half of all the homes the Internet Site values in the Chicago area are off by 11.5% or less - the rest are off by greater than 11.5%.
Homeowners themselves, by comparison, inflate their homes value by only 5-8%, according to the TX Research. Rutherford attributes this to more in-depth, personal knowledge of the features of the home, of course. But, although generally optimistic, most homeowners have friends or family members who have experienced today's market challenges first hand locally, and uses their input to factor their own estimates.
As you might imagine, Zillow disputes the validity research findings.
But these days, a Real Estate Practitioner has to use more than a computer-generated model to estimate home value - especially in a still-shifting Chicago Real Estate Market. Specific location factors have to be taken into consideration, as well as traffic and noise patterns, in addition to how the interior and exterior of the house actually shows as compared to the competition, and its level of upgrades.
Geez - even a Lil' White Dog with an IL Real Estate Broker's License understands that!
However, you dogs, in this day and Internet Age, there will always be room for an online opinion. It's just important not to consider it as the ONLY opinion a homeowner uses to establish value.
My two bones of an opinion, anyway!
Enjoy the weekend - make sure your humans take you on regular walks!
Please see my post today via BlogChicagoHomes.com.
YOUR ACE REPORTER ON FOUR PAWS,
BUDDY HOLLY MOSS & DEAN'S TEAM CHICAGO
Dean: Nice research piece putting together several sources. I can't recall a zestimate that I've ever seen being accurate. I've found Trulia a lot better source, which maybe isn't saying much.
Dean, it's hard to imagine them getting it right in cities that have neighborhoods that have been around for a hundred or so years. Maybe in newer suburbs, but not around here. In DC they are almost always on the low side.
Hi Dean, Here in Southern Oregon, I've found that many of Zillow's zestimates are inflated as to what people are actually willing to spend for a particular home.
On their own corporate materials, Zillow admits a ten percent error factor.
An agent needs to use that fact whenever Zillow muddies up the list price water....which Zillow does every time a consumer is naive enough to think a national website can shed any real light on home valuation.
The whole concept is nuts.
What irritates the heck out of me is that many agents advertise on their system.
Zillow does way more harm than good.