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February 16, 2006

fun application

zillow

finds real estate values of homes all over the country. can anyone tell me if this is accurate? i rent.

edited to add:
just got a note from one reader that said it undervalued his house by about $20,000. my question...maybe someone could answer this in the comments...what is the relationship of market value compared to tax appraisal value?

update:

rob says:"Tax appraisal will always be lower, for example including homestead exception I pay takes on about $75,000. My house appraised at $145,000.With homestead exception your taxes can only go up 3 percent a year. Home values for example went up 13% last year. Also, the tax collectors don’t always re appraise a house every year, some times it takes a while."

okay...so its a lagging indicator at best, at worst its a meaningless visualization of publicly available data...so the challenge is..how do you make it better? do you allow people to speculate on current value? create a virtual real estate market in the vein of alexadex or longbets? you tell me...

update #2:

thanks citydog for the explanation...i guess there are two ways to add value to this site...1) provide more acute data that reflects the market and/or ways of hacking the market or 2) provide some means for people to add their own data (what data i don't know). I prefer #2 because in the long run it would build loyalty to the site...

but for now i'm done worrying about someone elses problem.


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Comments (4)

Market Value is what someone will pay for your house. Tax Appraisal Value is a percentage of market value that is determined by your local body politic. That percentage is decided by the local government at a particular moment in time. So for example, in 1990 a town might decide to determine the market value of all homes and then tax them at a rate based on, say, 50% of that value. The market value is their best estimation at the time, and the percentage is decided politically; say based on how much they need for schools or other tax-funded services. The problem is that market values are quite volatile, and evaluating property is expensive and time-consuming, so over time, things get out of whack. If I bought a house in NYC in 1990 for $1MM and paid taxes based on a 50% tax value, then if you bought the house next door in 2000 you might have paid $3MM. Since the tax valuation is still at 50%, even though our houses are comparable, I'm paying tax based on $500K (50% of $1MM) and you're paying 3x that; tax on $1.5MM (50% of $3MM). Here's a town dealing with just that: http://www.eastwickpress.com/stephen/stephenarchive.asp?a=e&id=4946 So one problem is, the relationship between market value and "tax value" varies from place to place - and another is that it varies over time. As you'll see in that article, the variation over time, the out of whackness, is trackable. They refer to it as the COD or Coefficient of Dispersion. A higher COD equals more out of whack. In at least some cases, CODs are also publicly available data. So I suppose if you could access a db of the percent relationshsip of tax value to market value by zip code, and also the COD as some sort of mitigating variable, that might improve the accuracy. A lot of this is also described here: http://www.orps.state.ny.us/pamphlet/under_eqrates.htm ...where they also talk about "equalization rate." Equalization Rate seems to be the relationshsip between market valuation and tax valuation. So maybe if you have a tax valuation, the equalization rate could give you a market valuation, and the COD could give you a rating for how accurate that was likely to be, with a higher COD indicating a lower level of accuracy.

Posted by: citydog [TypeKey Profile Page] at February 16, 2006 7:02 PM

well, someone had just posted this site on a board I visit frequently - www.beautybuzz.com - and people from all over the country commented. my home, on zillow says its worth 1.06 million and while that would be fabulous, it just appraised at 162K so clearly NOT realistic - perhaps that is because its utah and they haven't gotten teh right info yet? however, many people in CA said that theirs appeared to be accurate. so while zillow is interesting, I wouldn't rely on it 100%...but if you'd like a nice little house in Utah, I'll give you a really good deal...say only $1 mill?! :)

Posted by: netc23 [TypeKey Profile Page] at February 20, 2006 5:53 PM

about depression and perception. I am often amazed at the gross misperceptions some folks have about themselves. Case in point, simple as it is, American Idol contestants who really can't carry a tune and yet firmly believe in their ability to sing. As a therapist I tend to see some truth in the theory that depressed people may not be as skilled filtering out the nasties as are more upbeat people.

Posted by: lala [TypeKey Profile Page] at February 22, 2006 11:31 PM

Hi Ze,
Just found this post, sorry I'm late to your blog. I can answer your questions:
- our accuracy is posted on the site (link on homepage) - it's better in some areas than others - often depending on how much data we have - here, in Seattle, the Zestimate is a pretty good starting point to figure out what a house could be worth.
- we'll soon allow homeowners to edit their house facts on the site - so, yes, something like your option 2 above. I'll post an update when this launches.
Thanks for The Show.
David G

Posted by: David G from Zillow.com at August 14, 2006 11:00 PM

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