“Desktop Valuations” are a quick way to look at the potential value of a home, but they do not take many factors into consideration, and some of the things they DO use to determine a value should not be used!

I answer questions on the Zillow site, and so many times the questions come from a place of, “Why, in my townhouse community where the houses are very much the same, is my neighbor’s worth $XXX and mine is worth $45,000 less despite mine being an end unit with an additional bump-out?”

That is a very good question, and one that doesn’t have a good answer. The algorithm takes into account the taxes you pay and when the house last changed hands. If a house hasn’t changed hands in some time, the taxes generally are lower, and that would bring the “value” of that house down. That just doesn’t seem right, does it?

Next to this is an example of the “range” of value for one house I found. If a professional real estate agent walked into your house and told you they thought it might sell for somewhere between $391,000 and $740,000, would you feel comfortable that the agent knew your market?

How about the houses “for sale nearby.” Do these look like they belong together as a picture of a particular Towson community to you? They seem to be a random selection of homes that happen to be in the same zip code.

The biggest issue is the quality of the Baltimore Zestimates.

As you can see here, Baltimore Zestimates are within 5% of an actual sales price only 42.6% of the time. They are within 10% of an actual sales price 66.4% of the time. They are within 20% of a sales price 83% of the time. These are with a median error of 6.1%.

Think about what that means.

On a $400,000 sales price, the Zestimate may show $380,000 or $420,000 — but again, that is only 42.6% of the time.

To get above 50%, you have to go within 10% of the actual sales price. So on that same $400,000 house, a Zestimate 66.4% of the time will be from $360,000-440,000.

To get to the closer 83%, you have to bring that out to 20% of a sales price. That could drop the Zestimate down to $320,000. Would you as a Baltimore seller be happy with that if your house were truly worth $400,000? How about a homebuyer? Would a Baltimore homebuyer be happy to pay $480,000 for a house that is really worth $400,000? Probably not. And the buyer’s mortgage company most likely wouldn’t let it happen, because an actual appraisal would most likely be close to the true market value of $400,000.

And don’t forget — that is with a median error of 6.1%, or approximately $24,000 give-or-take, on that $400,000 house.

Real estate everywhere is LOCAL. Hyper-local even.

Baltimore real estate values can be different street-by-street!

For a true understanding of your house’s value, don’t count on automated valuation websites. Contact me for a true idea of you Baltimore house value. I’d love to help!

Would you like to know more and see additional Zillow issues in the Baltimore area? See my past posts on incorrect Towson Zillow Zestimates for details.

The amusing part to me, is when I clicked on it, directly under the asking price is the Zillow Zestimate: $396,500. Yes, you read that right, Three hundred ninety-six THOUSAND, five hundred dollars.

Now, I realize Zillow’s algorithms have what they claim to be somewhere between a 7-11% margin of error, but this one is off by 88.27%. OFF BY ALMOST 90% OF VALUE. Hm. Think something might not be right?

Yet Automated Valuation Systems are the way banks are doing quick appraisal reviews, and no wonder they may be coming in low.

I’ve discussed the Zillow Zestimates in the past, beginning with Zillow Zestimates for Towson Real Estate May Be Misleading. I have come across a large number that were not close to a selling price of a home.

Then, I had communications with some Zillow executives, where some light was shed on why it is possible they are off in our area, which I discussed in Misleading Towson Zillow Zestimates Explained Further.

Zestimates started to complicate things further as the market began to drop, because banks began to reduce Home Equity Lines of Credit, and were using Desktop Valuations to do so. When one of my clients called his bank, his loan officer pulled up Zillow & told him that’s why it had been dropped. (See Incorrect Towson Zillow Zestimate Strike Again.)

Earlier this year, Zillow updated their Algorithms to try to correct some of the problems. For the Baltimore metropolitan area, according to the site’s “Zestimate Accuracy,” Zestimates are within 20% of an actual sales price only 78.3% of the time (with a 7.9% margin of error).

For a $200,000 house, being 20% below would bring the price down to $160,000. Above, that price (which would make a seller happy, but not a buyer or appraiser), would be $240,000. That’s a tremendous difference!

Real estate is very local. Even street-by-street or neighborhood-by-neighborhood within a zip code can have majorly different values.

If you would like an accurate Towson home value estimate, please contact me. I can help you anywhere in the Baltimore real estate market area, or if you are in a different state, I can refer you to an agent anywhere across the country.

I like to know my Towson real estate marketplace so when I am asked how much a home is that someone passed on the way to my house, I know the answer.

One family member who lives not too far away, said he went on Zillow to find out how much his home is worth. He is not selling anytime soon, and didn’t want to “bother me”, but couldn’t believe that his home was worth over $210,000 less than he bought it for just 2 1/2 years ago.

Now, a neighbor’s house is on the market for $624,900. This area is very diverse, much like Towson, so the neighbor’s house is much smaller, with significantly lesser acreage. It’s Zestimate? $440,500. $184,400 difference (30%!).

This brought me to show them my past posts about Misleading Towson Zillow Zestimates and the one about how my past client’s HELOC was reduced based on the very incorrect Zillow Zestimate on his home.

Pulling two homes that are on the market near my Towson home (that he passed, and yes, had asked me about), I found one listed for $2,495,000. Zestimate? $971,000. Over $1.5 MILLION difference (39%!) The smaller one down the street from there? On the market for $615,000, Zestimate $489,000. (20% difference).

I wrote about it on a Realtor website called ActiveRain to find out if others are having similar issues. I also sent the information to my two contacts at Zillow. Responses have been that the site is very off in areas across the country. The one contact at Zillow, David Gibbons, stated in an email to me:

“It appears as though the Zestimate values for unique homes in this area that have not recently sold (like this one) seem to be driven largely off the tax values. For some reason, this homeowner pays incredibly low taxes (half that for homes selling at $2M.) I’m pretty certain that that is why our estimate is indeed off…”

Again, this emphasizes that real estate truly is LOCAL. However, if a site is designed to helps consumers determine values, shouldn’t those values be SOMEWHAT accurate?

If you would like an accurate Towson home value estimate, please contact me. I can help you anywhere in the Baltimore real estate market area, or can refer you to an agent anywhere across the country.

I pondered this recently, as a listing I have coming on the market in Hunt Valley has a Zestimate about $40,000 LESS than the value determined during my true, in-depth market analysis as a licensed Towson Real Estate Agent. (On the other hand, using their “My Estimator” tool brings the value up to over $110,000 HIGHER than its true value!) 

With a closer review of the Zillow site, I was able to find some interesting accuracy statistics about the Towson Home Price Zestimate averages (per Zillow.com):

• Zestimates within 5% of actual sales price (actual home sales) : 30%
• Zestimates within 10% of actual sales price (actual home sales) : 50%
• Zestimates within 20% of actual sales price (actual home sales): 71%
• Median Error: 10%

Here is the actual verbiage from them, which helps me understand the inaccuracy:

Data Coverage and Zestimate^® Accuracy

The home data we have compiled to generate a Zestimate home valuation varies by location. Some counties provide all the data we could hope for, but others are lacking such key things as the number of bedrooms and bathrooms, or, in some cases, the square footage of the home. The more data we have, the more accurate the Zestimate. And, we’ve made it easier for our users to help us improve accuracy by incorporating edited home facts into our Zestimate calculations. In some areas, we might not be able to produce a Zestimate at all, but we do have some basic information on the homes.

When I stopped to think about it, I realized that the site does not have correct information because Baltimore County has not provided it to the public about the square footage, number of baths, the fact that it has hardwood floors throughout, a finished basement, and other imperative details when determining a Hunt Valley House Value.

As an example, if there is a home in Towson with the correct value of $300,000, 71% of the time the Zestimate could price the home as low as $240,000. Can you imagine being a seller viewing that info? Or how about a buyer, if it were 20% ABOVE? Would you, as a buyer, be happy with paying $360,000 for this home?

Zillow.com even acknowledges the importance of getting a comprehensive market analysis from a qualified local real estate agent. To get your free Towson Home Price Estimate, call me!