What's your home worth? Zillow may not know

PORTLAND, Ore. – If you own a home, or are looking to buy, chances are you've heard of Zillow.com. It's a Web site that gives you an estimate of how much a house is worth.  

However, our investigation found that if you're using it to price your home you could be making a big mistake.

Mark Hepner's professional appraisal of this home in the Alameda neighborhood of Northeast Portland turned up a valuation "definitely in excess of $500,000." But plug the address into Zillow.com, and you'll see a "zestimate" of $424,000.

Not only is the value much lower, but the "home info" on Zillow just doesn't match up with the actual property. Zillow's listing says the home has metal siding, and says the home was last updated in 1922.

"The whole house has been completely painted," Hepner said to point out the discrepancy. "It's a gorgeous piece of property."

There also are major changes inside, including a new kitchen and appliances.

"A kitchen remodel can be a hundred thousand dollars difference in a property value," points out Hepner.

However, you don't see that upgrade on Zillow. The listing also says this house only has one bathroom; there are two. Another huge discrepancy: "There's 1000 square feet, finished on the second floor of this property, that's not included in the Zillow estimate, Hepner said.

For Windermere Real Estate Broker Roberta Tawell, even the things that will never show on a standard property listing can increase the perceived value of a home: "These bamboo floors really lighten up and brighten the space," she said. To her, that's a main selling feature.

Tawell said she deals with what she calls the "Zillow factor" many times when she meets with sellers.

"The first thing I ask them is 'What do you think your home is worth?' and their answer generally is, 'Well, Zillow says my house is x, y, z,'" Tawell said. 

Zillow uses what it calls a "proprietary algorithm” – meaning a secret formula – to come up with its zestimates. Zillow does say it looks at public data for millions of homes, compares homes within a community, and its statisticians use that data to come up with the market value.

Tawell said that doesn't work in diverse neighborhoods like Northeast Portland, where one home can be worth hundreds of thousands more than the one right next to it. These homes, she said, are “unzillowable.”

"I think Zillow is good for giving you an idea of what's going on in the area," she said, "but certainly not to price your home."

The broker said coming up with a selling price is really a boots-on-the-ground endeavor. You have to see the amenities on the inside, and really research the neighborhood to determine if the home price matches up with the true value.

"Zillow doesn't know that your house might be next to a dump, for instance ... that sort of thing," Tawell said. "That's going to affect its market value."

Zillow even tells people on its Web site that it is up to homeowners to update the site if they've made renovations or want to note something unique about their home. It also cautions that a zestimate "is not an appraisal" and that you should talk to a professional real estate agent or appraiser.

“You need a human,” Mark Hepner said, "You need a human."

According to Hepner, an appraisal will cost anywhere from $400 to $700. However, he said it's "well worth it" – especially considering you could make a $100,000 home-pricing mistake by relying on a Web site.

"Sometimes [the zestimate] is pretty close," he said. "But sometimes it's way off. When it's way off, we want to be able to explain why our numbers are different."

Portlandmaps.com offers a similar starting point for buyers and sellers. It lists this Alameda home at $560,000.

This site is run by the City of Portland and uses public data that's available to all of us.

The real estate agents and appraisers KATU News spoke with say it's not always right on, but it's usually more on-target than Zillow.com.