Real Estate
Valuing your home with the flip of a coin
Setting a price is one of Realtors’ toughest tasks

As Realtors, we know that one of our most difficult tasks is pricing a home. That holds true whether we are representing a seller or a buyer.
One of the great evolutions in real estate over the last decade is the power of the Internet, and more than 90 percent of homebuyers begin their search there. We think that’s great, and buyers are more empowered than ever with loads of information. Some of that information can come from sites like Zillow that offer what’s called an “automated valuation model” – AVM for short – that purportedly presents a great estimate of the current market value of millions of homes.
It’s cool technology, amassing an enormous amount of information from publicly available sources in one place that is then scrubbed through very sophisticated algorithms to predict value. And all of that is presented in an easy-to-use user interface. And to their enormous credit, Zillow has done a tremendous job in reaching “top of mind” status with consumers. There’s just one problem: Those predicted values are wildly inaccurate and inconsistent.
As Realtors, we know that one of our most difficult tasks is pricing a home. That holds true whether we are representing a seller or a buyer. Market pressures change from week to week and from neighborhood to neighborhood. The motivation of the parties is always a factor, as is the condition of a home and those around it. No algorithm, however sophisticated, can quantify the value of a kitchen that was remodeled just before a home was put on the market or a yard that is poorly maintained. It simply isn’t possible for any AVM to predict the value of a home with a level of accuracy sufficient to make a housing decision. Zillow knows that’s true – and they say as much on their website (although you have to dig a bit to find it). They have this to say about their “zestimates” of value:
“The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”
Yet not a week goes by that we don’t encounter a consumer who is fixated on a particular value for a home because that’s what Zillow says it is. Kudos to Zillow for making this kind of impression on the public – brilliant marketing. But our research shows that, on average, those “zestimates” are within 5 percent of the actual value of a home just half of the time. (Funny, that’s what their research shows as well.) As Realtors, if we got within 5 percent of the value of a home that infrequently we’d be out of business.
So if a consumer wants to base their valuation of a home purchase or sale on what they find on the Internet, we suggest they take out a coin and flip it. Heads – that value is within 5 percent (high or low) of what the home is actually worth. Tails – that value could be 10 percent, 20 percent or more off target.
How accurate are ‘Zestimates?’
A detailed analysis of 500 recent sales in Metro Washington, D.C.: Beginning in 2010, McEnearney Associates has examined the accuracy of the estimates for property values that Zillow provides – their “zestimates” of value. This marks our fourth and most comprehensive analysis.
We took 500 properties in MRIS, our regional multiple listing system, that were scheduled to settle between March 24 and March 31, 2014. During that week, we looked for the zestimates of those 500 properties. Once the properties settled, we compared the actual sold price to the predicted values on Zillow. And to be as fair as possible, we excluded new home sales from our research because it is highly unlikely that Zillow would have details of the home to be built.
To provide some context, we compared the results of the March 2014 research to that of our September 2012 research. In 2012, we researched 280 properties, and we were able to find a zestimate for all 280. In the research we just concluded, we were able to find values for all but two of the 500 properties.
Generally, Zillow’s predicted market value is not any better now than it was 18 months ago. The zestimate is within 5 percent of the actual sales price roughly half the time. In September 2012, the zestimate was just as likely to be too low as too high; now, it is roughly twice as likely to be too low.
As one might expect with a computer-generated value, there are always “outliers.” In September 2012, of the 280 zestimates, the highest was roughly 140 percent of the actual sales prices. The lowest was 82 percent. In the research we just concluded, the highest predicted value was 256 percent of the actual sales price and the lowest was 62.8 percent.
There are significant geographic differences in Zillow’s performance in our current research. They get within 5 percent of the actual sales price just over a third of the time for properties in Washington, DC, and within 10 percent of the sales price less than 60 percent of the time. They are within 5 percent of sales price 43 percent of the time in Maryland and almost 60 percent in Virginia.
Zillow is a bit less accurate for condo and coops than for attached or detached homes. Mirroring the overall results, in all three property types Zillow is at least twice as likely to predict a value that is at least 5 percent lower than the actual value as predicting 5 percent high.
Not surprisingly, those properties that sold for $1,000,000 and more were a little tougher for Zillow to estimate accurately. They got within 5 percent of the actual price just over one third of the time. They fared much better for homes selling between $500,000 and $999,999, getting within 5 percent almost 60 percent of the time, but for homes selling for less than $500,000 they were within 5 percent less than half the time.
David Howell is executive vice president and chief information officer for McEnearney Associates. He is responsible for the firm’s technology, market information and public relations. He is also principal broker for McEnearney Associates in Maryland, and is an associate broker in Virginia and D.C.
One of the biggest headaches of the new home process is the actual moving part. By the time someone is buying a home, most people are beyond the “I just need a pickup truck, a pizza and a case of beer for my friends.”
If that is still someone’s preferred way to move, that’s great. However, many people find they need a much more robust plan. It can also trigger a lot of feelings about items one owns, what to do with them, do they have too much, should I keep this memento that I never use? Etc.
Moving is a chance for a person to “clean house” literally, figuratively, spiritually and energetically. A person can figure out which items they want to keep, and which need to go. As someone who recently moved across the country, I can speak to this experience. It’s also time for what people call “the fresh start effect.” This phenomenon, according to psychologists, can happen in little moments (like the start of a new work week) and bigger moments (such as moving from one home to the next).
The fresh start effect offers these benefits often mentioned by psychologists:
- Mental Accounting: Dates act as chapter breaks, letting you put past failures into a previous period.
- Psychological Distance: You separate your flawed past self from your aspirational future self (“That was the old me”).
- Optimism Boost: New beginnings clear mental clutter and increase your sense of agency and control
Does this mean that “the new you” will be the perfect version you envisioned? Probably not. We are humans. But it might mean you get a chance to “leave some of the old you behind” within the walls you used to live in, and now have a chance to have a new layout, a new décor, a new color pattern, new wallpaper, donate old furniture and books or magazines, throw out clothes you no longer use or fit in, and enjoy the opportunity to literally use the, “Does this spark joy?” method that was made so popular by Marie Kondo in her Netflix series.
So, for all its hassle and headache, moving is a chance to shake off the “old you” and try on the new you, to incorporate the items you would like to keep and use more of, and shed the items, habits, and ways of thinking that you feel no longer serve you.
I can speak to the experiences that several of my clients had when they moved from a previous residence to a newer one. It usually coincided with a change in relationship status, a change in employment, a change in family size, but sometimes it just seemed to correlate to a new attitude and perspective that the client was really hoping for.
I have literally had clients come to me after the fact, in tears, that they were so happy they made the decision to move out of a situation that no longer served them, and move into one that felt like a much better fit.
Change can be annoying and overwhelming at times, but usually most people come out the other side, not wanting to return to the way they were before.
Joseph Hudson is a referral agent with RLAH. Reach him at 703-587-0597 or [email protected].
Real Estate
With gas prices soaring again, a staycation is a good plan
Home can be your personal retreat and your own private resort
When airfare costs more than your monthly utility bill and a weekend road trip requires a second mortgage just to fill the gas tank, many homeowners are discovering an unexpected luxury: the staycation.
A staycation isn’t settling for less—it’s reaping the benefits of one of the biggest investments you can make: your home. Much more than a place to sleep, it’s your personal retreat, your gathering place and, with a little preparation, your very own private resort.
Whether you own a single-family home, a townhouse, or a condo, creating a memorable staycation starts with appreciating what made you fall in love with your property in the first place.
Start with a home refresh. Think about checking into a beautiful vacation rental. It’s spotless, organized, and inviting. You can recreate that same feeling by spending a day preparing your home before your staycation officially begins.
Clear away clutter, deep clean the bathrooms and kitchen, wash the windows, and put fresh linens on every bed – even if you’re not expecting guests. Fluff the pillows, light a favorite candle, and place fresh flowers on the table. These small touches instantly make your home feel more luxurious.
If your budget allows, hiring a professional cleaning service can be one of the best staycation perquisites you make. After all, vacation should begin the moment you wake up and not after you’ve spent the day scrubbing floors.
Treat your staycation like a real trip. Set away messages on your phone and out of office notices on your email. Skip unnecessary chores for a few days. Giving yourself permission to relax may be the most valuable part of the entire experience.
One of the greatest advantages homeowners have over travelers is private outdoor living space. Whether it’s a spacious backyard, a screened porch, a rooftop terrace, or a cozy condo balcony, these areas can become the centerpiece of your staycation.
Stringing lights and adding comfortable seating, colorful planters, and outdoor rugs can completely transform the atmosphere without spending thousands of dollars. Add a portable fire pit, a tabletop fountain, or a hammock, and suddenly your backyard starts competing with many resorts.
Host an evening cookout, organize a game night, invite neighbors over for dessert, or gather around the fire pit for conversation after sunset. These simple moments often become the memories we treasure most.
Inside, transform your family room into a home theater complete with popcorn and comfortable blankets. Turn your breakfast room into a morning coffee café. Designate a quiet reading corner where phones are prohibited. Create a spa-like bathroom with plush towels, candles, bath salts, and relaxing music.
One of the highlights of traveling is experiencing new food. Instead of dining out every night, create themed dinners inspired by your favorite destinations. Prepare homemade Italian pasta one evening, Caribbean grilled seafood another, or a backyard Texas barbecue over the weekend. For a touch of whimsy, dress the part.
Pair each meal with music and libations from the region and enjoy dinner outdoors whenever possible. Suddenly, your dining room becomes part of the vacation experience instead of just another place to eat.
Families with children can turn a staycation into an adventure by seeing their home through a child’s eyes. Set up a backyard camping experience with a tent, flashlights, and s’mores around the fire pit. Transform the living room into an indoor campground complete with sleeping bags and a movie under a blanket “fort.” Organize a backyard Olympics with relay races, water balloon tosses, scavenger hunts, or miniature golf using household items.
Encourage children to plan a family picnic in the backyard or on the patio, choose a theme for a movie marathon, or help prepare meals inspired by countries they’d like to visit someday. The goal is to create experiences your children will remember long after summer is over.
Enjoy the amenities you already pay for. Condominium communities and many planned neighborhoods offer amenities that residents often overlook.
Swimming pools, fitness centers, tennis and pickleball courts, walking trails, clubhouses, grilling stations, and community gardens are designed to enhance your lifestyle. During your staycation, make a point of exploring everything your community offers. You may discover you’ve been living beside your own private resort all along.
Real estate professionals often talk about resale value, appreciation, and return on investment. While those things certainly matter, there’s another return that’s harder to measure: the enjoyment you get from living in your home every day.
You don’t need a boarding pass to recharge. You don’t need a hotel reservation to make memories. Sometimes the perfect getaway is the one you already own.
Valerie M. Blake is a licensed Associate Broker in D.C., Maryland, and Virginia with RLAH @properties. Call or text her at 202-246-8602, email her at [email protected] or follow her on Facebook at TheRealst8ofAffairs.
Real Estate
When buying a home, it’s decisions, decisions, decisions
Keeping notes on the process makes for an informed purchase
When looking to buy a home, there are lots of details to consider. Many of my clients would come to me and say, “Joe I want to buy a place, but I haven’t decided which neighborhood to buy in.” And the struggle was real. A few clients had everything decided from the color of the hallway walls to the cabinet handles and sometimes which three square blocks they wanted to look at.
But other clients were occasionally looking at properties in areas as distinct as Union Market/NOMA, Brookland, Logan Circle, and then we would even go across the river to look at a property in Shirlington or the Van Dorn areas of Virginia, which all have their own unique flavor and characteristics.
Sometimes clients would tell me, “I only want to look in Mount Pleasant or Adams Morgan.” Or, “don’t even show me any properties west of this street or south of that street.” My job wasn’t to convince people where to live. It was to just take the parameters they set for me and find as good of a property in that zone as I could, coordinate the showings and, if necessary, offer the strategy.
One can see that buyers often had more decisions to make than a seller. From a seller’s perspective, the house was where it was, and we just had to make the best of it. But working with a buyer could mean looking at five different neighborhoods, and then being a “thought partner” to help them figure out which were the top two or three areas they had seen, and then further distilling those down into what was available and weighing those options against each other.
One house could have the dream bathroom but also be located six blocks further from a Metro stop, walkable shopping and dining, and “just too far away from my friends.” Another house could have all the neighborhood options a client was looking for, but was just not in turnkey condition, and would require an additional $30,000 of upgrades once purchased to make it into the dream home they envisioned.
One activity I often asked buyers to do was to keep an active list in their heads of the properties they liked, and to keep a running rank of the top three. I often encouraged them to bring a notebook along on the journey where they could take notes and write down questions they thought of as they looked. It was an important decision, and sometimes the largest purchase of their lives. Why not take it a little seriously, and take notes? This could often help the buyer later when they felt it was time to decide.
The point here is, keeping a notebook handy can sometimes help a person with what feels like an overwhelming process. It provides a space to explore how one feels, jot down important details to remember, and then use that to make an informed decision.
Joseph Hudson is a referral agent with RLAH. Reach him at 703-587-0597 or [email protected].
-
Delaware4 days agoRepublican challenger misgenders McBride during forum, forced to leave
-
Music & Concerts5 days agoQueer mega stars coming to D.C. this fall
-
Turkey4 days agoActivists protest outside Turkish Embassy in D.C.
-
District of Columbia3 days agoOver 2,000 turn out for Hands Around the Kennedy Center protest
