Zillow in Southern California is highly inaccurate. I can look at 2 different neighborhoods of regular tract homes that are a few blocks from me, and show you houses that are next door to each other with Zestimates that span a $600,000 and $300,000 price difference in identical homes…

Zillow is a joke. Here is a house I was tracking in Temecula. It’s a $100k off.

Price Reduced: 07/18/06 — $497,990 to $489,000<--Greedy in a declining market Price Reduced: 07/20/06 -- $489,000 to $479,000 Price Reduced: 07/26/06 -- $479,000 to $471,500 Price Reduced: 08/02/06 -- $471,500 to $458,990 Price Increased: 08/07/06 -- $458,990 to $489,000<--- ?? Price Reduced: 08/12/06 -- $489,000 to $447,500 Price Reduced: 08/31/06 -- $447,500 to $439,000 Price Reduced: 09/13/06 -- $439,000 to $438,999 Price Reduced: 09/15/06 -- $438,999 to $424,990 Price Increased: 09/20/06 -- $424,990 to $427,215<--- ?? Price Reduced: 09/23/06 -- $427,215 to $424,990 Price Increased: 09/25/06 -- $424,990 to $427,215<--- ?? Price Reduced: 09/29/06 -- $427,215 to $424,990 Price Increased: 10/02/06 -- $424,990 to $427,215<--- ?? Price Reduced: 10/03/06 -- $427,215 to $419,000 Price Reduced: 10/05/06 -- $419,000 to $408,990 Another great part is Zillow's zestamite at $513,609 (close?)

It also takes a while for new comps to show up in their estimate. I kept checking zillow for the sale price of house that I knew sold in August. The sale just showed up on zillow a week or so ago. The seller had been asking 585k and took 535K. Plus, I don’t know what incentives they gave the buyers. They probably could have gotten 585k at the peak.

I have a background as an appraiser (though I am not doing it now), so maybe I can help with the difference between Zillow and listing prices.

In “down” markets, sale prices will always lag listings, especially when sales are slow. I don’t envy appraisers in this market. What do you do in a neighborhood where you have three sales that may be four months old and three listings at prices lower than the sales would indicate? You know the sales are not an accurate reflection of current value…but what is?

Conventional wisdom is that listings determine the bottom end of the value range – i.e., the value of a home cannot be less than the asking price of similar homes in the area. However, in a very slow market, listings aren’t an accurate indicator of value, especially if people listing homes have not “faced the music” and recognized where the market REALLY is. That’s my hunch of where the market is right now – massive mismatch between where the sellers want to sell and where the buyers want to buy.

This mismatch will probably last until foreclosures start. Lenders hate holding properties – they aren’t set up to be landlords, they have to add staff to do it, etc. etc., so they will dump properties for what they can get for them. I appraised commercial real estate in the last huge So Cal downturn and I was shocked at how banks dumped properties.

I have evidence that they are both high and low (but usually high). I’ve had many Loan Officer’s using Zillow in their intitial conversations with borrowers. But we’ve found that degree of inaccuracy is not suitable to a good prequalification.