Jan 4th 2009 01:08 am 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.

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Posted by cringely / Web Sites & Services

44 Responses to “Your house is worth less than you think”

  1. Bill on 04 Jan 2009 at 2:05 am #

    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.

  2. Ryan Morlok on 04 Jan 2009 at 2:36 am #

    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.

  3. Karl on 04 Jan 2009 at 9:31 am #

    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.

  4. Rob Sama on 04 Jan 2009 at 9:51 am #

    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.

  5. Rob Sama on 04 Jan 2009 at 9:54 am #

    Also, I thought Case Schiller Weiss (now part of Fiserv) was the big Kahuna in professional evaluations…

  6. DWB on 04 Jan 2009 at 10:46 am #

    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.

  7. Keith on 04 Jan 2009 at 11:11 am #

    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.

  8. Sean Graham on 04 Jan 2009 at 12:06 pm #

    RealQuest didn’t even list my property… :)

  9. Blomquarter on 04 Jan 2009 at 12:07 pm #

    We just bought a house in Chicago (October, ‘08) for $545K.
    Zillow = $665K
    RealQuest = $533L

  10. Blomquarter on 04 Jan 2009 at 12:09 pm #

    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.

  11. MikeS on 04 Jan 2009 at 12:56 pm #

    Realquest says $549K.
    Zillow says $498K.
    This is in Colorado.
    I tend to believe Zillow in this case, maybe I’m pessimistic.

  12. Keith on 04 Jan 2009 at 12:58 pm #

    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?

  13. Christopher Svec on 04 Jan 2009 at 2:33 pm #

    They’re only about $3000 different for my house (in Austin, Texas - I wonder if different markets are more “stable” or predictable).

  14. Cara on 04 Jan 2009 at 3:28 pm #

    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!

  15. SC on 04 Jan 2009 at 3:32 pm #

    (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.)

  16. RS on 04 Jan 2009 at 4:48 pm #

    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.

  17. Marko on 04 Jan 2009 at 4:52 pm #

    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.

  18. Ben K on 04 Jan 2009 at 6:30 pm #

    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.

  19. Tanner Lovelace on 05 Jan 2009 at 10:23 am #

    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.

  20. Dylan on 05 Jan 2009 at 11:15 am #

    Marietta, GA:

    RealQuest: $206k
    Zillow: $245.5k

  21. Skeptical Fanboy on 05 Jan 2009 at 11:59 am #

    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.

  22. Mike on 05 Jan 2009 at 1:02 pm #

    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.

  23. jepace on 05 Jan 2009 at 3:05 pm #

    Zillow: $720k
    RealQuest: $763k

    This is in a distant suburb of San Jose, CA

  24. jjNCTiger on 05 Jan 2009 at 5:01 pm #

    House purchased - 1/06 for 184,500 (2800 sq ft. 4br 2.5 bath)

    Today Zillow: 181,500
    Realquest: 172,000

    Suburb of Memphis, TN. Interesting……

  25. brock on 06 Jan 2009 at 11:45 am #

    Chicago, IL

    Zillow: $380k
    RealQuest: $281k

    yikes. that’s quite a spread.

  26. Matt on 06 Jan 2009 at 1:37 pm #

    For a house in Peoria, Illinois:

    Bought for $164,000 in October, 2004.

    Zillow: $272,500 (range: 215,275 to 321,550)
    RealQuest: $214,000

    Going on gut feel, if I were to sell today, I’d expect the actual price to be closer to the RealQuest estimate, maybe even lower. The people living next door have a comparable house and said they are planning to move within the next year. It will be interesting to see how that affects the estimates of these two sites.

  27. SR on 06 Jan 2009 at 9:26 pm #

    Location: Midtown Manhattan - 1bdrm apt

    Zillow: $816,5000

    RealQuest: $659,000 (value on the map)
    If you click on the red ‘View/Buy Report’ button, then estimate becomes: $986,000

    Quite a range!

  28. Robin G on 07 Jan 2009 at 11:25 am #

    Spring Texas
    2660 sf

    Zillow: $156,000K
    RealQuest: $154,000K

    New Construction, paid $152,000 in 2000.

  29. JK on 08 Jan 2009 at 12:36 pm #

    Somewhere in Orange County, CA:

    Zillow: $544,500
    RealQuest: $474,000

    Purchased in 2001 for $309,000

    Just a tad under 15% difference. Interesting thing is that almost all the homes in the surrounding area are 15-20% lower on RealQuest vs. Zillow. Knowing the market in my area, I think the RealQuest prices are more accurate.

  30. Mark on 08 Jan 2009 at 1:49 pm #

    Near Denver CO.

    Purchased $164K in 2005.

    Zillow $161K (though the chart shows as low as $145K a few months ago).
    RealQuest $138K

    (sigh)

  31. Bill McGonigle on 08 Jan 2009 at 5:35 pm #

    Neither has my house. RealQuest lists two repos in my town, the other 848 homes are unlisted.

  32. Ro on 11 Jan 2009 at 1:36 am #

    I bought my home 10/08 for 300K
    Zillow estimates my home at 303K
    & RealQuest at 313K

  33. JaromSki on 11 Jan 2009 at 4:19 pm #

    East Wasatch Bench in South Ogden, UT

    I maybe am one of the few that was pleasantly surprised when I check RealQuest. I bought my home in Oct 2007 for 554k and RealQuest values it at 597k. I am in an area w/ low sales activity and very little foreclosure activity. I think that might be propping up the valuations.

    I don’t think I could near that much if I were in a position where I had to sell it. Zillow doesn’t even list a Zestimate for my home. I guess I haven’t made it into their system yet.

  34. Tim W on 12 Jan 2009 at 8:40 am #

    Purchased a house in The Woodlands Texas, north of Houston, June 30 2008 for $370k

    Zillow - $329k
    RealQuest - $361k

    probably $340 ish

  35. Townsend Harris on 12 Jan 2009 at 6:58 pm #

    Zillow’s estimated pricing truly comforts me: my predecessor added one and a half bathrooms *without* pulling building permits, and Zillow (and the town’s own appraisal records) indicate just one bathroom. I do not intend to correct the data because I’m thrilled to pay less in property taxes.

  36. Blivits on 16 Jan 2009 at 2:27 pm #

    RealQuest: 368,000
    Zillow: 277,000

    My house turns Bob’s theory upside down by almost 100K, but then I live in one of those neighborhoods where house values are all over the map. There are houses from the 1920’s and 30’s on up to newer ones with lot sizes from 1/2 acre up to 5 acres.

    I’m glad the RealQuest value is that much higher! Thanks Bob for cheering me up!

  37. ron connor on 17 Jan 2009 at 4:32 pm #

    Both are sometimes really scary. Home valuations will never work based on a database alone compared to a human. Oline valuations are all just a parlor game. A great gimmick for Zillow.
    (i really do believe in and use technology in my RE practice, but…)
    You mention PROFESSIONAL so i thought of agents. Why not use a person? It’s free. I can price a home in my market w/in 2%. maybe 3-4% on a ultra unique home. any professional RE agent could.
    I felt that option was missing.

  38. Tim Coker on 20 Jan 2009 at 10:20 am #

    I live in Charleston, SC. Mt. Pleasant, actually, which is the area that blew up the most in the bubble, but in a smaller neighborhood. Hi, Bob!

    realquest says 268,000
    zillow says 243,000

  39. Randall Smith on 20 Jan 2009 at 3:54 pm #

    Somewhere in Montgomery County, MD:

    RealQuest says $953K (oddly precise)
    Zillow says $1,023.5K (absurdly precise)

  40. Brand Hilton on 21 Jan 2009 at 3:12 pm #

    Bought my house in a low-end Dallas suburb for $68k in about 1992.

    Zillow: $107k
    RealQuest: $94k

    RealQuest is definitely closer to the truth.

  41. David on 13 Feb 2009 at 2:37 pm #

    San Diego, CA:

    Zillow: $682K
    RealQuest: $663K
    Appraisal done a week ago for refinance: $735K

  42. Marc on 03 Mar 2009 at 4:49 pm #

    My home comes out pretty close on each site.

    Zillow -$229.5K
    RealQuest - $231K

    I purchased in July 07 for $250K

  43. Mark on 24 Jun 2009 at 2:47 pm #

    The challenge with these automated valuation systems is that it only takes one or two houses to start messing up the valuations of the entire neighborhood.

    For example, my friend’s home in Redwood City, CA is in a terrible neighborhood where homes were not worth very much, but this house they purchased was upgraded to levels that above and beyond the anything in the area. Imagine putting a McMansion in a neighborhood of post WWII building boom 900 square foot homes where garages were a luxury, the thought of a second bathroom was silly and the constant rumble of trains made you feel alive. Their purchased this house for well over $300k more than the average comps and I still think the previous owner lost money but he didn’t care.

    Guess what, in the couple months, everyone’s home skyrocketed in value by $200-300k. Either through the use of the valuation software or by real estate agents adjusting the truths when they go to print out all those comp sheets the prices moved very fast by huge amounts that could not be blamed by bad mortgages alone.

    If someone were smart, they could exploit this flaw to profit, after all the real estate agents are. We need to not only look at banks, but how this entire real estate racket works.

  44. Effects of xanax. on 15 Nov 2009 at 6:27 am #

    Xanax….

    Xanax. Geniric xanax….

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