While there are many online tools available to assist today's real estate buyers and sellers, Zillow identifies as the market leader with a database of over 110 million homes. Zillow offers a breadth of real esate information, including current available inventory, home details, community information, and other tools to identify a home's market value. To simplify the valuation process, Zillow offers a "Zestimate," a proprietary estimation of the market value of a home, which according to their website is "calculated from public and user-submitted data, taking into account special features, location, and market conditions."
User beware, the Zestimate can vary widely from true market value. In markets such as Tahoe, where it is common to see a $500,000 property near, or even next to, a $5,000,000 property, it is difficult for the Zillow algorithm to adjust for factors that only can be viewed through a site visit.
Zestimates work best with communities that are homogeneous, and Tahoe is the furthest thing from homogeneous. When conducting a market analysis on any given property, we compile a comprehensive list of factors that influence the value, starting with the physical characteristics. When evaluating lakefront property, there are a myriad of less obvious physical characteristics that come into play, including orientation of the home, beach type, topography, boating amenities, water depth, and wind exposure. These influencers are very difficult for an algorithm to consider. In addition to the long list of physical characteristics, the tempo of the market, buyer activity, and scarcity of supply of a particular type of property are also market factors that are challenging for Zillow to quantify. The niche market of Tahoe lakefront property is not well suited for applying an algorithm without the input of a local expert with experience in the field.
Two recent sales exemplify challenges with the Zestimate. A lakefront home in Rubicon Bay that we recently sold for $5,000,000 has a Zestimate of $1,169,222. In Carnelian Bay, 5372 North Lake Boulevard closed last week for $5,725,000. The Zestimate shows $1,818,796.
Click the image to see Zestimate.
Zestimates are typically, but not always, lower than true value. There are several instances where the Zestimate is much higher than Tahoe market value. Zillow admits the Zestimate can diverge from true market value, and it warns its users to "supplement Zillow's information by doing other research." To combat the Zestimate's unreliability, Zillow is offering a $1 million prize to the person or group that can most improve the accuracy of the Zestimate.
As long as you do not soley rely on Zillow to value a property, Zillow's content can be a useful tool for buyers and sellers researching local real estate.
If you would like a local expert valuation of a Tahoe home, please contact our office, and we will be happy to provide a complete picture.