Check out this headline:
HouseValues tops Zillow in Georgia comparison Sounds like HouseValues must be better than Zillow, right?
Here is some background to that headline from John Cook's Venture Blog:
"Using a five-bedroom five-bathroom home in Alpharetta, Georgia, Money magazine takes a look at four online home valuation services, including Kirkland-based HouseValues and Seattle-based Zillow.com, and compares them to the work of a professional appraiser. The conclusion? Zillow undervalued the property by $166,000 when compared to the appraiser's report. Picture HouseValues, on the other hand, placed a value of $575,000 to $630,000 on the home. That range was pretty close to the $625,000 price tag from the appraiser, who visited the home in person."
What a strange conclusion based on the
report by Money Magazine.
Here are a few holes I see in this story:
1. Is the professional appraiser any good? What results would you get if you ran the same test with four professional appraisers rather than four web sites against the appraiser?
2. Why did Money Magazine use a fixed value for Zillow rather than the range Zillow provides on every property Zestimate? Is there a reason they held Zillow to a different standard than HouseValues and Domainia?
3. Why is John Cook reporting that HouseValues beat Zillow when it was actually Domainia that came out on top? Assuming the professional appraiser's estimate is correct, Domainia's price range better framed that estimate than Housevalues.
4. Did Money Magazine adjust Real Estate ABC's estimate based on local market conditions? If not, was that a fair test?
5. Why didn't the story better emphasize this key point: "
Of course, the true value won't be known until the house sells, so in this case everyone might be wrong."
Bottom line: Money Magazine could have provided at least some value by tracking a home (or homes) through to a sale to find out which appraisal process most accurately predicted the sales price rather than drawing conclusions based on relative differences in estimated values. Cook could have given Domainia a fair shake based on the weak assumptions involved in this relative comparison test, or asked the same question: Why didn't Money Magazine track a home to a sale to determine which estimator was really most accurate?
1. Posted by: David G from Zillow.com on August 24, 2006 12:54 PM:
Hi Tech Evangelist, it's David G from Zillow.com
Good questions. Money Magazine failed to mention that the house does not in fact have a Zestimate (Zillow.com's market value estimate) and therefore also doesn't have the Value Range you mention. Unfortunately, Money's article inaccurately suggests that Zillow produced the Tax value we publish for the house and is misleading their readers who like John thought that they were reviewing our Zestimate accuracy.
Amy Bohutinsky, our Director of Communications clarified this on John's blog: "We were pretty disappointed in the Money article, because they left out the key fact that Zillow does not have data in the Georgia County where they searched. Instead, Zillow shows the county's market assessed value (not a Zestimate). While this is made clear to the user when a search is done in that area, it was not clarified in the article."