patrick.net

was the latter not an arms length transaction or perhaps a short sale?

A huge component of Zillow's algorithm is recent sales on the house in particular. In addition, property taxes also play a major role.

If you look at my house, bought in March 2011, the graph looks like it is declining. Meanwhile, home prices in my home market are up 15% since March 2011.

The disconnect is because I bought it for signficantly under zestimate. The zestimate at that time was about $50k higher than my purchase price, based upon property taxes I am sure.

Consequently, I fought (and won) to lower the tax value of the house. Both of those factors, in the face of house prices increasing in my area, skew the historical zestimate for my house.

It looks like the value is falling since I bought.

My neighbors on both sides sold their nearly identical houses for significantly higher than my zestimate. But since I bought 2.5 years ago at a lower price, that is the over-riding factor.

Waitup says

How crazy is Zestimate?

It's just a guess!

Zestimate sez I'm almost 100K richer than a year ago. Yay!

Trulia is even worse.
They have to fudge the numbers every week to justify the media spin. One week I'll see a 25K increase, but that's just so the quarter can show an uptick, then the next week it will show a -27K decrease. For much of the year, my neighborhood was listed as an orange in their price range heat map. Then followed by a few months of green, with huge spike increases to just make a quarter increase.

A consistent zestimate error I've observed in multi-story buildings is, they underestimate the difference between the penthouse floor and lower floors. The square footage might be the same, but Zillow doesn't account for other variables: better views from a higher floor, the penthouse having no upstairs neighbors, some penthouses have higher ceilings and/or skylights, etc. For these reasons, a penthouse apartment might be worth 20%-30% more than an otherwise identical apartment on a lower floor, but the zestimates don't reflect that.