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  • 12265 Scripps Poway Parkway, Suite 115
  • Poway, CA 92064
  • P: 858.530.2374
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A Refresher on the Mystical Zestimate

There is such a thing as a free lunch. Thanks to Zillow’s star of stage and screen, Spencer Rascoff (I can’t turn on CNBC without seeing he’s grinning likeness these days), I and a room full of die-hard real estate professionals in search of the truth were treated to a session on Zillow’s offerings. Mostly, I was there for a refresher on the mystical Zestimate. The yummy veggie sandwich was a bonus.

If you are a home buyer, you know the Zestimate as the indisputable, final word in a property’s value – unless, of course, it seems high. Then you just disregard it as so much drivel. Ditto home sellers who peer from the opposite end of the looking glass. To sellers, when it’s a big, attractive number, the Zesimate is revered on par with a tablet delivered from Mt. Sinai, while lower numbers are discounted quicker than a spiral ham on the day after Easter.

As for agents, well, Zestimates are a bane to be tolerated.  Steve likens them to the proverbial broken clock – right a couple of times a day. But we continue to get whopped upside our little broker noggins with these magic numbers at open houses, at showings and at listing appointments. So, for all of you who are currently reloading the Zestimate bazooka for the next time you run into me in the produce aisle, here is what Zestimates are (and aren’t), according to the nice man who fed me yesterday.

From the Zillow web site (and you have to look hard to find it):

A Zestimate home valuation is Zillow’s estimated market value. It is not an appraisal. Use it as a starting point to determine a home’s value.

Well, no. I don’t use it as a starting point to determine value, nor would I recommend that the consumer do. But, Zillow also provides a “value range” that is more useful.

The Value Range is the high and low estimated market value for which Zillow values a home. The more information, the smaller the range, and the more accurate the Zestimate.

Here are the talking points for what makes a Zestimate and the factors affecting their accuracy:

  • Zestimates are developed using a complex, magic algorithm and a lot of big, scary computers.
  • Factors considered in the algorithm include past sales in the area, past sales of the particular property, tax records, and probably a bunch of other stuff I forgot to write down.
  • Zestimates are not the midpoint of the “value range.” (Don’t ask me why.)
  • Homes in areas with a lot of comparable, recent sales will enjoy a more accurate valuation, as will homes with more recent prior sales.
  • Homes which are unique, which haven’t turned over in a long time, or for which the tax records are incomplete (no square footage, wrong data) will have the most flawed Zestimates.
  • When a home is listed for sale, the property information is updated to reflect the information provided in the listing. So, if the tax assessor shows that your home has two bedrooms and your listing reflects twelve, the information is updated.
  • When a sale records, the Zestimate is adjusted to reflect the sale price (duh).
  • This one is pretty cool. When a sale records, the algorithm notes the difference between the prior Zestimate and the actual sale price. This “delta” is then used to adjust the property’s Zestimate in the future. In other words (and I am sure Spencer will correct me if I got this wrong), if my home had a Zestimate of $500,000 yet I sold it for $550,000, then the delta is 10%. When that ornery little algorithm determines my Zestimate to be $600,000 next November, it will adjust it and deliver a valuation of $660,000 to reflect that my home was indeed special.

As time goes on, Zestimates will become more accurate.  They have to, because there will be more actual sales data from which to draw. But the valuation tool will always be a best guess, if even a very smart one. Until Zillow’s computers are able to join me for a walk-through and see the living room where the tenants have been changing the oil in their Harleys or the master bathroom where the fixtures were imported from the Versaille Palace, the Zestimate only be like that broken clock.

How accurate are they? Here is Zillow’s own chart.

Screen shot 2010-04-06 at 8.31.23 AM

In San Diego, the median error is 13.1%, which means that the Zestimate can be expected to fall within an approximate 26% range of value. Only 40% of the homes sold in San Diego sold within a 10% striking distance of their Zestimate, and 63% within 20%. Obviously, if the my own broker price opinions had this degree of accuracy, I would be summarily drummed out of the corp and living in a refrigerator carton in Placerville.

That being said, consumers are going to continue to arm their value arguments with their own Zestimates when it is convenient. Just be aware of the limitations. Unless Zillow is willing to buy your home, the Zestimate is not a reflection of your home’s true market value. It’s just a “wag” which will get a little better over time.


Just for fun, I pulled up one of our listings in Scripps Ranch. This home is currently offered at $579,000.(Subliminal message: You should buy it.)


Screen shot 2010-04-06 at 8.08.58 AM

The Zestimate shows a value of $645,000 which, had it been right, would have resulted in 18 hungry buyers throwing body blocks as I refilled the brochure holder last weekend. As it is, this home is still available. At least they gave me a $129,000 “value range” within which to maneuver, even if the range is in slightly smaller print.

New California Stimulus Program – County Recorder takes an April vacation.

Most of you (the ones who have been cheating on us and reading other blogs) are probably aware of a limited time chance in California for home buyers to double-dip. From the California Association of Realtors (CAR):

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state home buyer tax credits.  To take advantage of both tax credits, a first-time home buyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time home buyers may use the same time frames to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Which brings us to the Law of Unintended Consequences. State legislators who failed Logic 101 and who, due to lost revenues and government cutbacks, apparently now find themselves without calendars didn’t anticipate the effect of the little overlap. What was presumably intended as a stimulus measure has stimulated all buyers currently in escrow to delay their closing until May.

In case you missed the punch line, let me point out the obvious. These are people who were buying anyway! So, in effect, the broke State of California has just thrown untold millions out on the proverbial freeway.

We have several clients who are currently horse-trading with the sellers to get an extension of their closing dates to next month. And, don’t get me wrong. I don’t blame them. Who doesn’t like free money? It’s just that I can’t believe that the intent of the State tax credit was to hand out bonus prizes to people who had already made the decision to buy and had committed to a purchase. Why not make it retroactive? I purchased my home in 2000, and I could use a little extra cash.

On the subject of stimulus, what you may not be aware of are some lesser-know bills that are winding their way to the Governor’s desk.

AB 349-BS – Home buyers who enter contract on April 17th between 1:00 PM and 1:45 PM (GMT) and close escrow during the current administration will receive a free four-slice toaster in their choice of white or brushed steel finish (subject to availability), provided they did not sign the contract electronically or otherwise use modern means to communicate with their agent and the seller during the transaction in order to comply with current lender policies. “Modern means” may include e-mail, text messages, or handwritten notes written with other than a feather quill. Hand gestures are acceptable, but only if they are recorded for reel-to-reel playback.

AB 350-BS – For all home buyers closing escrow before 10:00 AM on any Thursday in May, the State will donate $1,000 to the homebuyer’s favorite school. Dubbed the “Textbook Buyback Program,” costs will be offset through elimination of campus water fountains, bathrooms, teachers and other non-essentials.

AB 351-BS – Home buyers who meet the requirements of both AB 349-BS and 351-BS and who can name all islands in the Lesser Antilles will receive a gift card for 10% off their next purchase. The State has set aside $12.83 for this program, which will sunset when funds run out on Tuesday. Buyers who think they may qualify should first read the State booklet, “Mean-Spirited Island Chain Names,” for more information.

AB 352-BS – The “Instant Winner Bonanza Bill,” this program awards prizes to lucky home buyers who can match the numbers on their first meter reading to the closing costs on their final settlement statement. For odd numbers, buyers will receive $1 million paid over 25 years. Those with matching even numbers will enjoy a free Grand Slam breakfast at Denny’s (no substitutions allowed; gratuity not included). There will be no costs to the taxpayer, as the program will funded through the elimination of power and potable water services to incorporated municipalities.

AB 353-BS – Under the provisions of this bill, for home buyers who can prove that they wouldn’t have bought a home anyway but just decided to do it now rather than in, say, July or August, because they wanted large sums of money and a new toaster, the State will just buy them the dang house (value to be determined based on Zestimate).

How’s that for stimulus?

Say "Hey" to San Diego Castles Realty's Newest Agents!

This post is a week or so overdue. I have been channeling a bad circus act lately, trying to keep countless balls (or, are they flaming swords?) in the air. Somewhere in all of the insanity, four awesome and veteran agents joined our team, and we are honored.

Where to begin with my giddiness? First and foremost, they share our philosophy of progressive thinking, innovative business practices, unwavering ethics, and exceptional customer service. They are smart — scary smart — and passionate about real estate. Of course, they put the client first. Always. You would think that in San Diego, where real estate agents outnumber minivans and Golden Retrievers, it would be easy to find agents with these traits. Trust me; it is not.

Here are the elevator introductions for the Sunday Gover and Associates team. Formerly with a large national brokerage franchise, they had the courage to take a chance on our little enterprise and commit to helping us build our vision. You can read more at their web site, If one of our three readers happens to drop by, I know they will take a moment to say “hey” and make them feel welcome.


Sunday Gover is a San Diego native and the lead agent of Sunday Gover and Associates.  She grew up in Coronado and graduated from University of California at San Diego.  Having lived all over the county including Hillcrest, North Park, South Park, La Jolla, Solana Beach and Scripps Ranch, Sunday has a thorough knowledge of just about any neighborhood.  She and her family have lived in Scripps Ranch for nearly ten years. She is an accomplished buyer’s and seller’s agent and has extensive experience in military moves.


Peggy Webb grew up in New York and Atlanta and graduated from Fairfield University in Connecticut.  She specializes in homes along the I-15 Corridor with special emphasis on Scripps Ranch, Poway, Rancho Peñasquitos, Rancho Bernardo, Carmel Mountain and Mira Mesa.  Having lived in San Diego for 17 years, Peggy has been a part of the Normal Heights, Mira Mesa and Scripps Ranch communities.  Her family has  lived in Scripps Ranch for 11 years.

sashatn3Sasha Harvey was born in Guadalajara, Mexico.  She has a unique ability to service our Spanish speaking clients and is able to conduct all business, secure appropriate lending and write any contracts in Spanish.  Sasha and her husband have been in real estate with over 16 years’ experience.  Sasha graduated from the University of California at Davis in Psychology and Economics.  She has lived in San Diego for 25 years in Solana Beach, University Heights, UTC/La Jolla and currently lives in Rancho Penasquitos.

asancheztn2A San Diego Native, Audrey grew up in Oceanside.  She graduated from Western Washington University in Bellingham, Washington.  Audrey has lived in Vista, Hillcrest, North Park and now lives in Scripps Ranch with her family.  Audrey has a background in business and executive leadership and training.  The former branch manager for a large brokerage, Audrey heads up the team marketing for Sunday Gover and Associates.  She is also the team’s client care representative, coordinating all aspects of the transaction.

FHA News Short

(Thank you to Tim Fiero, sometime guest writer, all around great guy, and new Dad,  for this update on Federal Housing Administration (FHA) lending requirements.)

As many of you may have heard, the FHA funding fee is being increased from 1.75% to 2.25% on or around April 5th. While you may hear a number of lenders whining about this, this is a win and a big one.

The alternative was higher down payments. Some of the alternatives floated out there were increasing minimum required down payments to 5% — or even 10%.

The big thing here is that FHA helps a vast number of buyers in today’s market. My estimation is that, in some markets, up to 40% of home buyers are using FHA loans to finance their purchases.

With our current, more challenging lending environment, we need FHA, and we need it to be solvent. Increasing the funding fee has minimal impact on the buyer’s monthly payments, and it is a more affordable alternative to larger down payments. Given the conditions of Fannie Mae and Freddie Mac (and who knows in what direction they are heading), the fact that FHA is holding the line on the 3 1/2 down payment requirements, even at the expense of an increased funding fee, is very good news.

California Home Buyer Tax Credits on the horizon

California State Capitol Building
Creative Commons License photo credit: prayitno

(Update: The Governor signed AB 183 into law yesterday, so it’s official.)

In honor of National Copy and Paste Day (I made that up), following is from the California Association of Realtors:

The California legislature on Monday passed AB 183, providing $200 million for home buyer tax credits. The Governor is expected to sign the bill into law this week. C.A.R. supported this important legislation since its inception.  Part of a package of four bills passed at the request of the Governor, AB 183 is designed to help stimulate the economy and create jobs.  It allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under AB 183 purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).

So there.

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Office Location

  • San Diego Castles Realty
  • 12265 Scripps Poway Parkway, Suite 115
  • Poway, CA 92064
  • P: 858.530.2374
  • F: 858.876.1701
  • E: info (at)
  • CA BRE# 01853496

Broker Information

  • Kris Berg, Broker
  • CA BRE #01241572