Zillow is the number one most visited website in the world for real estate. The Zillow Group network has over 80 million unique users according to ComScore’s latest traffic data. That’s a whopping 64 percent of the online real estate market share.
So when Zillow CEO Spencer Rascoff discounted the accuracy of his company’s home value Zestimate, it rightly made headlines in MarketWatch.
Rascoff recently sold his own home in CA for almost 40% less than his Zestimate and bought another home in CA, paying 8% over the Zestimate.
According to MarketWatch, Rascoff said “When we were trying to figure out the price for the house that we bought, we relied on the expertise of the real-estate agent to help us decide what to pay. The Zestimate, at that point, was less important,” he said.
“We call it a Zestimate and not a zeppraisal and not a zeprice. It’s meant to be a starting point,” Rascoff said. “To determine a more accurate opinion of a home’s value you should hire a real-estate agent, or more to the point, you should sell the house and then you will know how much it’s worth.” – Spencer Rascoff, Former Zillow CEO
Most full time professional real estate agents and appraisers know a Zestimate is not an accurate way to value a property. For example, only 37.8% of Zestimates in metro Atlanta are within 5% of value, according to data analysis by the Path & Post real estate team, as explained in Don’t Under Zestimate Your Home.
If the CEO of Zillow recommends the expertise of a real estate agent to determine market value, how does the average consumer choose a real estate professional? Reading articles about How to Choose a Listing Agent and checking out online Zillow Reviews are good starting points.
Update 2021: Zillow went through a lot of changes since this original post, including a new CEO, Rich Barton, and a new Zillow Offers program that placed them into the iBuying market. Since Zillow already calculated Zestimates, iBuying seemed like a natural expansion. But it soon discovered the market wasn’t that simple and canceled their iBuyer program.
Zillow CEO, Rich Barton, said “fundamentally we have been unable to predict future pricing of homes to a level of accuracy that makes this a safe business to be in.”
We now have 2 different CEO’s from Zillow confirming that pricing homes is harder than it looks and it takes a local expert to guide a seller to success.