Zillow's announcement that it is allowing sellers to add information to the company's "zestimates" of their information but not to change the zestimate raises some interesting questions. How accurate is Zillow and will homeowner-added information improve accuracy?

Some homeowners haven't been happy with Zillow's accuracy, even though the company states on its website and in numerous blogs criticizing the company such as sellsiusrealestate.com, that the zestimates aren't intended to replace the CMA, the appraisal or other professional tools.

"Zillow is a research tool -- a starting point to help consumers become smarter about the value of homes," explains a spokesperson to Realty Times. "Zillow is not designed or meant to take the place of an appraisal or the services of a Realtor."

But accuracy issues continue to dog the site.

In February, 2006 when the site launched to an avalanche of publicity (who were those guys, anyway?) Businessweek was told that Zillow's "estimates are typically on target, falling within 10 percent of the actual home-sale prices 62 percent of the time."

Spokespersons now claim that Zillow's national median margin of error is currently 7.2 percent. "Zillow posts all of its accuracy rates, county-by-county, for each area in which there is data," says a spokesperson. "This is the accuracy rate for the first number you see, prior to adding in facts or inside knowledge of a home with the My Estimator tool. Adding more intimate knowledge of a home will increase its accuracy, and can be done via the My Estimator tool, which lets you add information like a kitchen remodel, deck or view, or update facts like square footage or number of beds/baths."

While that's not the kind of accuracy standard the real estate brokerage industry is held to (Realtors come within 99 percent of list-to-sales price, according to the NAR), that hasn't stopped some buyers from taking the zestimates as gospel. One seller was so frustrated with the buyer's refusal to accept any data contradicting Zillow, he threatened to file suit, but wisely decided to write Realty Times first.

Not long afterward, Zillow issued its new policy -- that homeowners can indeed add information to their home's zestimates.

"Homeowners simply go to Zillow.com, register under their own name, and "claim" their home's record through an online private verification process," trumpets Zillow.com. "Once the short process is complete, homeowners can add remodel information, update or change facts (such as square footage, beds/baths, etc.), as well as provide more specific details, such as a waterfront view, type of parking or roof composition."

"Based on those additions, as well as choosing their own "comps," or comparable transactions, homeowners can then re-calculate an estimated value for their home and choose to publish this estimate for other Zillow users to see. All homeowner-contributed information will be shown alongside Zillow's existing data for that home, including the Zestimate^TM valuation."

Previously, zillow allowed consumers to modify any home's estimate via a private worksheet -- adding in remodel information, additions and choosing their own comparable transactions to calculate a more accurate value. Now, a home's owner can choose to publish this information for anyone to see, says the site. "They can also choose to keep it private, or to email it to select others."

Buyers can, of course, trust what seller/homeowners have to say because, "This new feature will allow homeowners to update facts about their home (such as square footage or beds/baths), and add details that can't be culled from public records, like recent remodels, a swimming pool or deck addition, etc. This information is shown side-by-side with zillow's public data and zestimates, to give users another source of data. By adding this extra data and information, users can derive a more accurate valuation," says the spokesperson. "As part of the community features in zillow's site, users are able to report content they think is inappropriate or should be removed (see "report this content" on a home details page). The content will be investigated by our customer support team for false or malicious uses.

"However, it is not our intent to check whether a home seller actually has the three bedrooms or two baths they post," she says. "We trust people to do the right thing, and sellers are motivated to be truthful in what they post, given that a potential buyer could check against their listing or open house."

But some are still concerned about what's becoming known as Unzillowables -- that information about a home that is subjective. Sellsiusrealestate.com coined the phrase, defining it as that information which is "unable to be valued by the popular website zillow.com" such as intangibles, emotional factors, curb appeal, inside information, and unique features such as privacy and views.

Explains "David" from zillow.com on Sellsiusrealestate.com, "The posts I've read on this topic fail to show an understanding of how AVM's (automated valuation models) actually work; the piece that's missing from this commentary is that an advanced algorithm will consider both explicit and implicit characteristics of a house. Without spilling the secret sauce, here's what I mean: First, data recorded by the tax assessor (which by the way, includes "views"), is explicitly factored into an AVM. Next, data not recorded by the assessor is implicitly included in AVM results through the inclusion of past transactions and sometimes, tax assessments. This is how Zillow does account for factors like proximity to schools and arterials. So, the factors you consider "unzillowable" are actually implied by the values of past sales transactions -- of the house in question, its neighbors and its comps. So, when we say that Zestimates get more accurate with time (and transactions), this is often what we're referring to."

David goes on to say that the majority of Zillow visitors have "realistic expectations of Zestimate accuracy. What continues to be our primary challenge is raw data -- to feed both the explicit and the implicit models -- we're doing well there, but still have a ways to go -- and have a few plans in the works for improving coverage further."

Published: September 25, 2006

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