Your house is worth less than you think
We have access to so much data today, thanks to the Internet. But those data vary a lot in quality. Just like you can find virtually any opinion on any subject somewhere on the World Wide Web, so too you can find a wide variety of opinions on what your house is worth. But which one is right? That can only be determined for sure through true price discovery – actually selling the house. Until then we’re just arguing over opinions. But some opinions really ARE better than others.
The Big Kahuna in Internet home valuations for consumers is Zillow with its Zestimate – a best guess at what your house is worth based on local comps and a proprietary algorithm to figure exactly where your house lies in the local price range.
The Big Kahuna in PROFESSIONAL home valuations is First American CoreLogic. Many mortgages even now are made without traditional appraisals, based solely on automated home valuations from CoreLogic. But CoreLogic costs money while Zillow is free.
Wait a minute! CoreLogic has a division called RealQuest started specifically to compete with Zillow and similar Internet startups. RealQuest tries to upsell you, but getting the true CoreLogic value for your house for free is still possible using the service.
So how do the two compare? Both supposedly rely on the same data, both apply proprietary algorithms. But since actual loans are supposedly made on the basis of CoreLogic (RealQuest) numbers you’d have to give those the benefit of the doubt.
Let’s do an experiment. Use both to look at any properties you own or like and report back with some answers.
From my own basic research, however, I have to tell you that RealQuest numbers are consistently lower than Zillow numbers – in some cases A LOT lower.
So what’s your house really worth? Probably less than you think.
Checked my house and Zillow ($457K) was about 10% lower than RealQuest ($508K). My estimate before I used the sites was around $475K which is about a 20% drop since I bought in March 2006.
The guy down the street is listed at $950K. Zillow says $652K while RealQuest says $541K. The asking price is crazy high but it would be an excellent buy at $750K. My guess is that neither site has any way to value things like construction quality or views. In my neighborhood, each of these can be worth an additional $75-100K.
A realator friend of mine said that Zillow overstates values because when comparing your property to others that have recently sold it doesn’t take into account that the seller may have paid closing costs. Don’t know if it applies to RealQuest.
Zillow was much lower then RealQuest for me. I think this is because in my area Zillow doesn’t have enough information for their algorithms to work as well as it does in other states (Zillow for my area seems t only know sq feet, and even then half the comps don’t seem to include square feet). Perhaps in states where Zillow knows # of bedrooms/bathrooms the numbers are more realistic.
My house on RealQuest shows it’s worth $542k. On Zillow it’s worth $592.5k. We bought the house in Sept 07 for $550k.
Also, I thought Case Schiller Weiss (now part of Fiserv) was the big Kahuna in professional evaluations…
RealQuest $270k.
Zillow $255k.
I think that 255k is closer to what I’d actually get if I sold and that may even be high.
I looked at about 20 houses in my town, which is just outside of Boston. On almost all of them, RealQuest has the lower valuation. In most cases, the difference is less than 10%, but for one house RealQuest was 32% lower than Zillow.
Oddly, my house is an exception. Zillow values it 17% less than RealQuest.
I found that if you click on “See home info” for an address in Zillow, they actually give you a price range. Their Zestimate price is consistently near the top of this range. The RealQuest value is typically near the bottom of the Zillow range, sometimes within the range and sometimes just below it.
For example, here’s the Zillow data on a house around the corner from me:
Zestimate: $482,500
Value Range: $414,950 - $516,275
As you can see, their estimate is toward the top of Zillow’s value range. For this house, the RealQuest value is $409,000.
RealQuest didn’t even list my property…
We just bought a house in Chicago (October, ‘08) for $545K.
Zillow = $665K
RealQuest = $533L
Oh yeah, strangely, both sites list the property as recently sold, but Zillow’s price is still WAY high, so who knows how they’re weighting actual sales.
Realquest says $549K.
Zillow says $498K.
This is in Colorado.
I tend to believe Zillow in this case, maybe I’m pessimistic.
Blomquarter:
For houses near me, Zillow doesn’t include recent sales in their estimate. The home info page lists the sale with an asterisk. The footnote says, “Transaction not included in Zestimate.” That seems crazy to me. Doesn’t a recent sale give you useful information about the home’s value?
They’re only about $3000 different for my house (in Austin, Texas - I wonder if different markets are more “stable” or predictable).
Charlotte, NC:
4 bedroom, 2.5 bath, unfinished basement
RealQuest = $328,000
Zillow = $356,000
difference = $28,000 (~ 8%)
We paid $287,000 in May 2005.
There is a house two doors down with a similar floor plan that’s been for sale for 9 months; that price has recently been dropped to $325K.
Zillow is estimating that house at being worth $275K. (Big difference from our estimated house value but I don’t believe our houses are that different!) RealQuest estimates that house at $340K.
Our house has a $30K retaining wall to give us the only flat backyard in the neighborhood, so that should boost our home value slightly. Either way, I’m glad we’re not planning to sell in the next year or two. We are, however, considering a refinance.
Interesting article - thanks for posting!
(near) Minneapolis, MN
Zillow: $325K
RealQuest: $269K
With home values and recent sales in the neighborhood, $270K is about right. I’d be happy to get $270K right now, although we’re thankfully not in the market.
(Purchased the house for $200K in 2000.)
My house listed at $274K on Zillow and $238k on RealQuest. Zillow was way off on our square footage, listing it at over 2800 sq. ft where the reality is closer to 2100 sq. ft.
We refinanced this summer to put in central air and a heat pump (fuel oil was selling for $4.50/gal at the time) and the appraised value was $238k, so I wonder if RealQuest is using that data.
Near Dayton Ohio:
Zillow: $188K
RealQuest: $171K
Recent county re-appraisal: $165K
I think the RealQuest estimate is closer to reality. Thanks for pointing them out. Now I also know about a property in preforeclosure on our street too.
Our House:
Zillow Range: $171,900-219,650
Ziestimate: $191,000
RealQuest: $184,000
Purchased 11/2006 for $188,700
Milwaukee, WI
Built in 1928 and we are the 4th owners so odds are we won’t be leaving anytime soon.
Durham, NC:
RealQuest has our house at $10k more than Zillow does. However, the county updated house values for tax purposes last year and we successfully challenged ours and got it reduced. Zillow has it almost exactly what the county values our house at.
Marietta, GA:
RealQuest: $206k
Zillow: $245.5k
My house in Mesa, AZ (which I bought in September 2003 for $255k):
RealQuest: $342k
Zillow: $333k
The house across the street sold for $405k in 2006. Today, Zillow shows it at $306k, and RealQuest at $309k.
RealQuest values my old home (that I’m still trying to sell) at 73% of the Zestimate. Both values are lower than comps in the area and lower that my current asking price. The RealQuest number puts my current mortgage underwater. Maybe I’m hopefully optimistic, but I tend to believe my realtor that my current listing price is both fair and achievable.
For my current home, new construction condo, RealQuest doesn’t have a value and the Zestimate is lower than what I bought for in May.
Background: We accepted a relocation offer which is why we moved to a different part of the country without selling our old home.
Zillow: $720k
RealQuest: $763k
This is in a distant suburb of San Jose, CA