Home Values on Zillow Explained
Are you wondering whether Zillow house values are accurate?
One of the questions real estate agents often get from consumers is, “how accurate are Zillow home value estimates.”
Home buyers and sellers need to understand right from the get-go that a Zillow home value is NOT accurate the vast majority of the time.
More tools are available than ever for the average person interested in buying or selling a home.
The internet provides numerous resources for everything related to real estate – locating properties, viewing, listing, advice on buying and selling, and even pricing calculators.
Zillow is one of the more popular real estate websites offering many tools.
Unfortunately, while these tools can undoubtedly prove handy, there are times when using them can give you unreliable information.
One such tool that has proved to be unpredictable repeatedly is a Zillow home value or Zillow Zestimate, as the company likes to call it.
What is a Zillow Zestimate?
A Zillow Zestimate is a trademarked term used by Zillow for calculating home values on Zillow.
Zillow’s Zestimate provides a home’s value for any property in the United States. Unfortunately, Zestimate accuracy is all over the map, just like other online estimates.
When buying or selling a home, you should never rely on Zestimate on Zillow to make a value decision. Whether you buy a house or sell a house, you’ll want accurate information to make an informed decision.
Looking at a Zestimate on Zillow can be fun, but it shouldn’t be used to make vital real estate decisions. It is essential to rely on professionals, not online home value estimators.
There isn’t a home value estimator that can consistently be relied upon for delivering an accurate fair market home value.
By the time you’re done reading, you’ll have an in-depth understanding of why home values on Zillow should not be trusted.
How to See Home Values on Zillow?
It is pretty straightforward if you have never searched for your Zillow home value. You can get Zillow home values by address.
Just type your home address into the search bar. All the information on your property will be displayed, including the Zillow Zestimate.
You can also get Zillow home values by zip code as well. When you dig into the site, you’ll also see a Zillow home value map showing the estimations of properties in a specific geographical area.
So, if you’re looking for Zillow house values nearby your property, you can do that.
What is a Zillow Home Values Map?
Home values on Zillow for a neighborhood can be viewed on a map. By looking at Zillow maps, you can see an overhead view of the properties in a neighborhood with their estimated house values.
What is a Home Value Estimator?
As it sounds, an estimator of house values is a tool that will give you a ballpark estimate of your property. The Zillow Zestimate is not the only home value estimator.
You can get home value estimates from Realtor.com, Trulia.com, RE/MAX.com, Redfin.com, and others. Like Zillow Zestimates, these sites also can be way off in estimating home values.
Forsalebyowner.com provides estimates for those who are selling without a real estate agent. None of these home value estimators should be trusted to deliver accurate house values.
A free home value estimator should be used for laughs, not for making critical pricing decisions.
What is The Best Home Value Estimator?
There are many articles written online about the best home value estimator. None of them should be considered the best because they are all inaccurate.
The Problem With Zillow Home Value Estimates
Websites like Zillow have great potential to empower buyers and sellers. Where once the world of comparable sales and real estate values was understood only by real estate agents, now everyday buyers and sellers can learn tons of helpful information about area properties, including their own.
They no longer have to go to a real estate agent for every little piece of knowledge. The problem is that the estimates – or “Zestimates,” as Zillow calls them – are not always accurate. They can be wildly off, leaving the buyer or seller worse off than before they looked at them.
Zillow may do its best to give you an accurate price of what a home is worth. In the end, though, it is only an automated system that cannot think for itself.
It cannot account for variations in any number of things – changes that substantially alter the price from any “average.”
Could the estimations be better programmed to account for this stuff? Definitely, but we are not dealing with the ideal Zillow; we are dealing with it as it is now.
When trying to buy or sell, you cannot afford to be off by tens of thousands of dollars in your pricing or bidding.
So when someone asks a Realtor, “are Zillow home value estimates accurate,” you will probably see a look like the one in the picture above.
From my experience, looking at Zillow home values in the area of Massachusetts, where I am located, they are typically off anywhere from $20,000 to $50,000 of the actual market value. Probably better than some markets but worse than others.
You have better odds of seeing Bigfoot than an accurate Zillow estimate!Click To TweetHow Zillow Estimates Value
You’re probably wondering how Zillow calculates home values.
Zillow uses a proprietary formula to determine the value of a property based on information the website has obtained from public records and information entered by users.
For example, they will use the number of bedrooms, baths, the square feet of living area, and other property data points to determine property values.
The site knows what the home sold for the last time it was purchased, and it knows this same information for other homes in the surrounding area. Using this, along with data entered in by homeowners and user-submitted data – things like features of their particular home – Zillow comes up with a price that a home is worth.
Zillow’s proprietary algorithms take all available data and use it in the Zillow home value estimator to arrive at their market zestimates.
Unfortunately, Zillow’s algorithm cannot consider all the unique characteristics of individual properties that dramatically impact their value.
Assessed Value is a Significant Piece of The Zillow Zestimate
From what many have gathered, one value factor at the top of Zillow’s formula is using a property’s assessed value from tax records.
Unfortunately, rarely does the assessed home value correlate with market value. They are two completely different things. Towns use assessed values to collect taxes and, in many cases, trail the actual market value of a home.
Using this piece of information will throw off Zillow’s home values right off the bat.
In my experience, I have seen homes sell for over $100,000 more than the assessed value. I have also seen them sell for that much under the value.
Intelligent real estate agents never look at the assessed value when determining market value. If only life were that easy. It would make our jobs as agents so much easier.
The assessed value should be used for forming tax assessments, and that’s it.
Why Zillow Estimates Fail So Often
On the surface, Zillow’s method seems like it would give a pretty decent ballpark figure for the value of a home. And sometimes, it succeeds.
More often, though, the Zillow home value is off significantly – sometimes by 40% or more.
A property’s most recent selling price is undoubtedly helpful information and is likely the most accessible concrete data that Zillow can obtain.
What a home is sold for is information that buyers and sellers should know about properties. However, it does not indicate what a home is worth now.
The market is changing minute to minute and a sale price that is years, if not decades old, is no way to estimate the current value of a home.
The recent sale prices of nearby homes are also helpful when buying or selling.
Known as comparable sales, they are a significant factor in how a local real estate agent will price a home.
The problem is these comparable sales need to be considered for what they are – not as indisputable numbers.
Comparable sales can only be viewed as an apples-to-apples scenario in particular situations.
A Zillow Home Value is More Accurate With Cookie-Cutter Homes
If your home is very similar to all the other homes in the neighborhood – such as in a newer housing development of moderately priced homes – and no one has had time to renovate the properties, comparable sales may be easier viewed as apples to apples.
But if you are in an area where the age, size, or features are varied, it quickly becomes an apple to oranges situation: both fruit, but very different kinds of fruit.
The way a Realtor determines real estate market value is off the charts, different than how Zillow’s website does it. Local real estate agents or even professional appraisers understand how one comparable sale relates to the next.
An excellent Realtor is seasoned in comparing drastically different homes in a single neighborhood to get an accurate price on a property. Zillow does not have this kind of ability. This is why it can be off so significantly at times.
Comparable properties are only one tool in measuring a home’s value, and Zillow is not as great at using this information as it should be.
Zillow Tells You The Accuracy of Zestimates is Off
Zillow’s website does an excellent job of informing consumers that Zestimates may not be accurate on this web page. The problem, however, is that most people never see it.
Maybe it would be a good idea for Realtors to share this webpage more.
Another reason the estimates are so off is that their evaluation method differs from that of a comparative market analysis (CMA) completed by a real estate agent or a home appraisal completed by a local certified appraiser.
Geographically, the data Zillow uses is much broader than just your neighborhood or town. Zillow states that they often use all the county data to calculate property values.
There may be no recent sales in the “neighborhood,” but even a few sales in the area allow them to extrapolate changes in the local housing market for a particular area.
However, the data they gather does allow the models to incorporate the neighborhood patterns of recent sales.
Is there any wonder why Zillow home value estimates are so inaccurate? All that keeps coming to mind when thinking about using “county data” is you have got to be kidding me.
The values from one county to the next in my area vary tremendously! Let’s throw all the data into one big barrel and call it Zillow value soup. Frankly, that is precisely what the Zillow home value estimator does.
The Zillow Median Error Rate
Zillow states that the median error rate for all U.S. homes is 5 percent. It sounds impressive until you realize what that means. For all those non-math majors out there, the Zillow property value is within the purchase price only 50 percent of the time.
Frankly, that sucks! Can you imagine wanting to know the value of your home and the actual sale sales price was off by more than 5% over half the time? If you got a professional appraisal of the home, you would be greatly disappointed if they were off by that much.
If real estate professionals also gave you inaccurate information to make an informed decision, you would not be pleased. Who would?
Zillow also states that their media error rate for on-market homes is 1.9%, while their off-market homes come in at 7.5%. The correct listing price and corresponding final sales price are critical for buyers and sellers to make the best decisions.
When you sell your house, you want the estimated value to be accurate. Likewise, when buying a house, you want the subject property price range value to be close. Negotiating is tough if you’re relying on public data that is not accurate.
The bottom line is the margin of error is far too high to rely on at the end of the day. The real estate industry demands accurate information, and online tools are no way to get it.
The Zillow home value index may have improved since its inception, but it is still far from being a good thing to trust. The actual value of a home is best calculated by speaking with professionals.
Home values on Zillow don't come close to the accuracy you'll find from speaking to professionals.Click To TweetDoes Zillow Underestimate Home Values?
Home values on Zillow can be both under and over the present market value. Sometimes they are high, and sometimes they are low. Occasionally, they can be right on the money about the value.
When Does Zillow Update Home Values?
Home values on Zillow are updated weekly. Value updates can also occur when homeowners change their property information.
If you find an error in your property data, you can change it by logging into your account on Zillow. For example, if your bedroom count is wrong or the lot size is incorrect, you can fix it.
Zillow says that the home value will be adjusted quickly thereafter.
Why Did My Home Value Go Down On Zillow?
Home values on Zillow can change because of their algorithm changes. When this happens, values can go up or down. Zillow changes its algorithm frequently.
It is also possible that local real estate market values are dropping. When this is the case, your home value will drop.
What is The Zillow Home Value Index?
The home value index on Zillow provides seasonally adjusted property values in a given region of the country and specific housing types.
Here is a detailed explanation from Zillow on their value index.
Why So Many Real Estate Agents Hate Zillow
While hate is a strong word, this is how many real estate agents feel about Zillow. Why is this the case? It is all about one word – credibility.
As a whole, real estate agents have a difficult time being trusted by some people. In some circles, we are only regarded just above car salespeople.
When a home seller sits down to interview an agent on many occasions, a homeowner will already have visited Zillow and taken a look at their “Zestimate of value” for their home.
Along comes a Realtor who presents their comparative market analysis of all the households in the area that have recently sold, gone under contract, and are currently for sale.
The Realtor carefully takes the homeowner through all the local market data until they finally arrive at the suggested list price and probable sale price.
The seller’s jaw hits the floor. The local real estate expert has just come to the table with a value of $50,000 less than what Zillow says the house is worth.
This is where the real estate agent has to go on the defensive because “Mr. & Mrs. I don’t trust Realtors” is now looking at you like you have three heads.
How could Zillow be wrong? After all, they are a well-run organization, and we see them advertising on television.
Most sellers don’t understand that Zillow estimates the values of over 100 million homes across the country. It would be impossible for them to predict the value of every home in America accurately.
Zillow Doesn’t Come in Yours or Comparable Homes
Potential buyers and sellers need to understand that Zillow does not enter properties. They have no idea what you have done to your home or in similar homes.
They don’t know what, if anything, we do to our houses. You could drop $75,000 renovating your kitchen and baths tomorrow, and Zillow won’t know that.
The last time I checked, there wasn’t a Zillow peeping tom that looked in everybody’s windows. I think everyone can agree that dropping that much money into the kitchen and bath improvements will substantially impact market value.
How could you expect them to come up with an accurate estimate without this information?
Here are more things to ponder:
- Zillow doesn’t know that the town data card is wrong and you only have three bedrooms, not four.
- Zillow doesn’t know you have a $20,000 structural crack in your foundation that needs repair.
- Zillow does not know that your roof is on its last leg and needs replacement.
- Zillow does not know you have a significant easement running through your backyard that limits its use.
- Zillow doesn’t know you just added central air conditioning, a sprinkler system, a security system, and $10,000 worth of landscaping.
Is the picture starting to become more explicit about the accuracy of Zillow estimates? Zillow’s home values can be off by these things and others.
How Zillow is Useful
After reading the above information, you may think that I am not a fan of Zillow. That is far from the truth.
I love everything about Zillow except for their Zestimates of value.
Zillow’s other information can be helpful when buying or selling a home.
When you are ready to buy a home, they have an excellent platform for looking at properties. The information provided is second to none, in my opinion.
There is no doubt that tons of folks love the integrated Bing maps that come with every listing. These are handy when deciphering what is around a particular property.
They have all the information you would expect when buying a home, like the square footage, bedroom and bath count, age, lot size, taxes, etc. Where they excel, however, is their data on the past ownership of the home and what the owner paid.
These statistics are hard to find elsewhere, and Zillow does a marvelous of putting them at a buyer’s fingertips.
From a seller’s perspective, the site is excellent because the better a property looks online, the greater the chance buyers will pick up the phone to schedule an appointment with their real estate agent.
Zillow Has a Great App For House Hunting
Zillow also has an excellent app for those that have a smartphone. While out house hunting, you can quickly and easily pull up information in front of a home!
This, of course, really comes in handy when you are out by yourself and don’t have a real estate agent handy to ask a question you might not otherwise get the answers to immediately.
Folks, there is a reason why Zillow is the #1 most visited real estate website on the internet. Even though many Realtors hate them because of their crude estimating model, they provide excellent data that is helpful to both buyers and sellers.
However, you should NEVER think that a Zillow home value is what your property is worth.
How Much is My Home Worth?
When you want to know the value of your property, you should never rely on a home value estimator. The best way to get your property value is to speak with a real estate professional.
You can hire a real estate appraiser or a local real estate agent you can trust. A real estate appraiser will provide an appraisal, and a Realtor will provide a competitive market analysis.
You can see the differences between these two valuation methods to see which may be better for you.
Both will take an in-depth look at your property using comparable sales data. By visiting your property, professionals can better understand its strengths and weaknesses.
An online home value estimator such as Zillow Zestimates cannot do this.
Final Thoughts on Home Values on Zillow
Several studies demonstrate that it’s possible Zillow can be accurate within 80-90% of the value of a home. This means that its estimates can be a good starting point.
However, when you want to price a home to sell or know what a home is worth so you can buy now, its numbers are not accurate enough.
It would be best to have a savvy real estate agent for on-point accuracy who knows the area and is successfully working it right now.
Zillow also shows you how prices are trending, up or down, in a particular location. This is undoubtedly helpful information that can help you decide where and when to buy.
It is always good to know where prices are headed when making such a significant transaction.
Zillow is a valuable tool, but it does not provide enough accuracy on home prices to be used exclusively. The site states that its estimates are only a starting point. Keep this in mind when you are getting your own Zestimates.
If you are selling a home for sale by owner and were not planning on meeting with an appraiser or real estate agent to help you determine the accurate market value because you thought the Zillow estimate was good enough, hopefully, this has been an eye-opener.
Keep in mind that the number one reason homes do not sell is an unrealistic asking price. If you price your home incorrectly out of the gate, more than likely, you will end up selling it for less than you would have if priced correctly.
Additional Helpful Zillow Resources
- Facts and Figures on Zillow, including Zestimates – see more helpful information on how Zillow home values work. How far off are Zillow Zestimates of value – learn the discrepancy between a Zillow home value vs. actual market value.
- Why portals like Zillow won’t kill off real estate agents – understand why real estate agents will not become extinct because of anything related to Zillow.
Pricing a home properly is an art and science all rolled into one. It is not accomplished very well by trusting a computer-generated value, whether Zillow or another online valuation tool.
Always consult a local real estate professional or competent appraiser if you want an accurate home value.
Video: Explanation of Zillow Home Values
The video does an excellent job examining Zillow pricing and the accuracy of its Zestimate feature. Take the time to understand why Zillow estimates are not reliable. Home values on Zillow should be taken with a grain of salt.
The above Real Estate information on are Zillow home value estimates accurate was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 37+ Years.
Thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
Bill,
Great article on Zillow! Zestimates are definitely a problem, and we find that most buyers see that homes are already sold when searching. We created our own website to remind our buyers that good data is available as we remove the sold properties each day.
When thinking about Atlanta, please think of us. We would love to refer business to you as well. We have been with RE/MAX for 28 years and consistently on the top producer list in Georgia.
Thanks again,
Tony Williams
REMAX Unlimited
Thanks for the compliments Tony. I think Zillow has a great site with the exception of the valuation feature. It causes so much doubt with people. Zillow should stick with the rest of what the do well and get rid of this feature.
What a good article for homebuyers and home sellers! You are right in that Zillow uses a mathematical formula, but that it’s just that — a formula and not a person who can look at all the details and information about a property and give a knowledgeable and insightful value for the home.
It also doesn’t take into consideration that some things are more valuable in different parts of the country — pools are a great addition (and up the price!) to Phoenix houses; whereas here where I live and work in Newport Beach, CA, they aren’t quite as hot of a commodity because of the proximity to the ocean and the overall weather.
Zillow doesn’t provide the whole story/reason for a home’s price; only people can look at all the ins and outs!
Thanks Renee and you make some excellent points about the value of certain amenities in a home that Zillow could never account for based on demographics!
Zillow and the “Others” are only in the game for the “marketing numbers-hits so they can sell advertising on their websites. along with leads they generate and sell to Realtors…who are crazy enough to pay for them. Zillow and the others could care less if you buy a house because of their website value estimates or other information.
Your seasoned professional Realtor with local market experience can assist a seller with evaluating the most accurate local market value of a property. Even the MLS runs behind today’s market value due to reporting numbers being closed dates (30+ days old).
Not considering the contract price was agreed upon 30+ days earlier. Values can change in 30-45 days based on supply and demand. Sellers should be careful and not leave money on the table due to their lack of TODAY’S local market property values. Happy home buying/selling!
Steve I agree with you. Zillow is in this to make money however they can. There is no question if you are buying or selling a home you should always consult with a local real estate professional and not a Zillow computer generated value.
We need to flood media with this info. I get tired of my clients relying on Zillow.
Randa there are media outlets who have written about the inaccuracy of Zillow estimates of value including the Washington Post.
Bill~ I am so disappointed with Zillow. Believe it or not “we” have control to make Zillow go away because Zillow depends on us. Unfortunately “we” haven’t banded together, but “if” we ever do, “we” could shut Zillow down in a few months. Zillow depends on REALTORS paying them, all we have to do is STOP feeding the chicken, and hopefully one day “we” do!
I can’t stand how Zillow profits off of selling zip codes they don’t own to us. I despise how they use our listings as the bait. Even more concerning is Zillow does business as an entertainment company and that’s how they get away with publishing inaccurate Real estate information.
Bill,
Excellent article that really gets to the core of what is good and bad with the Zestimate and Zillow in general. The bashing just isn’t going anywhere (one reason I stopped) and the Zestimate will never go away. Hopefully, they’ll continue to improve it so the debate is lessened.
One brilliant point you made that is often unspoken is that agents have insight into factors Zillow will never have (foundation, improvements, etc).
In many markets those things have a significant impact on value, thereby making the agent the best option for an accurate value.
I’m glad this article is getting a good response. Hopefully, consumers are reading it as well.
Bryan I actually think Zillow enjoys being in the spotlight whether it is negative or not. Thanks very much for the compliments on the article.
I like your comments about Zillow. Zillow just trashed one of my listings as a pre-foreclosure and valuing it as below Zestimate at $175,000 less than the asking price.
Why does MLSPIN allow agents to link with such an inaccurate website? The few thousand agents who have checked off linking this site should un-check giving them free access. We should make Zillo pay for our information. Those running MLS Pin are not looking at our best interests as Brokers.
Jim this is the feeling among many real estate agents. The National Association of Realtors got it all wrong by letting these outside portals control our data and then sell the leads they receive back to us. It’s insane! I think Zillow loves the fact we talk about the inaccuracy of their estimates. It keeps their name in the spotlight.
The home we just sold had FOUR Zillow listings, each with a different status and “Zestimate.” Most of the data went back to the owner before the owner before us. The HIGH “Zestimate” was 3/4 of the property’s sale price, which actually went for more than our list price. It’s an arbitrary, idiotic number that uninformed people still use as a metric.
And I can say as a seller we had to consider it, too, for that reason.
It would be nice if realtors would find a way to keep track of who doesn’t consider houses or pays less, at least in part because of the “Zestimate,” and then we all class-action sue the bejeezus out of Zillow.
We bought our house 1 year ago and six months later Zillow said their Zestimate was $10,000 less than what we paid for it. Their info indicated our purchase was via a Foreclosure Auction.
It wasn’t, it was a conventional sale; we tried to correct the error twice but they did not change it. Since our purchase, we have added almost $15,000 in improvements, including Energy Star heating and air conditioning units, fencing, extensive landscaping, leaded glass entry doors, etc, and now Zillow has dropped the value by another $5,000. It is absolutely sickening that they get away with hurting property values with harmful and wrong information. It should be illegal to do so.
Clara it really is amazing that Zillow who otherwise provides great information wants to keep this inaccurate tool on their site when so many people complain about it. The only theory is Zillow loves being mention whether negative or not.
Bill-
This is such a great article. I can’t tell you how many times I’ve had to defend a home value against a Zestimate. My first question to my sellers at that point is, “when was the last time that Zillow was in your house”?
It is incredible the way that people cling to and trust a Zestimate because they are a giant. Coming from a software background, I try to explain to people that there is a computer somewhere churning data to spit out a value on your home and how do we know there isn’t an error in their algorithm. So, so frustrating.
Thanks,
Geva
Thanks Geva. That is exactly why I created the article. As a real estate agent you get tired of seeing what amounts to blatant misinformation presented by Zillow. This article should set the record straight and help anyone reading understand the facts about a zestimate.
I remembered this post and just yesterday, a friend of mine was crowing about the “Zestimate” on his home. I am glad I fould this again I am sending him the link to your article. People forget, this is just computed generated and often outdated information.
Bill,
Great article.
I don’t know how Zillow gets away with publishing home values in the first place. I’ve found in reviewing my own property value on Zillow’s website over the past few years it just depends what month it is as to what Zillow value on my home is. I find that a $150,000 difference higher and or lower is quite alarming on a 30 day revalue estimate.
A true home value can’t be accurate until such time as the home is visually inspected both inside and out by a qualified appraiser/realtor.
I find all the Zillow/zestimate bashing quite suspicious given the source. Absolutely, only commission seeking real estate agents should be the source of all knowledge when it comes to real estate valuation!
Sure there are things Zillow can’t know in creating specific zestimates, but their numbers are generally pretty useful as a guide, and they have their track record of accuracy right there on the website for all to see. Lord knows how many real estate agents I have talked with about real estate values who’s numbers were far less accurate than Zillow–but real estate agents get to toss around numbers and never provide any information on their accuracy track record.
Like all formulas, Zillow’s zestimate numbers have improved, and will continue to improve as more information becomes available online and they further refine their algorithms. And here is a not well-kept secret–many real estate agents use formulas like price per square foot in coming up with their value estimates–and they should!
Scott if I didn’t know better I would be suspicious of whether you work for Zillow or not. Clearly, you are not well informed on the topic as almost every major news source in the country has done a story on the inaccuracy of Zillow Estimates. Their estimates are not useful as a guide in the least. I don’t know a single person who is interested in finding out the value of their home that would accept being off by ten percent or more. Sorry but that is ridiculous.
The only thing I do agree with you is that there are plenty of real estate agents who don’t know how to properly value a home. This is evidenced every day by the myriad of price reductions on homes that were not priced properly.
By the way price per square foot is one of the worst ways to value a home! There are four classifications of housing including economy, standard, custom, and luxury. A 2500 square foot home could be built in any of these forms. The difference between economy and luxury can be astronomical.
Hi Bill,
Zillow could very possibly be the evil empire. They are really just a marketing machine looking to sell leads to Realtors. I know they don’t really care about the accuracy of the Zestimate. All they truly care about is selling overpriced leads.
For homeowners that want a ballpark figure on what their home may be worth the Zestimate may have a place. To get a true picture of a list price for a home an informed homeowner should use a Realtor. There are too many factors that are not public record about a home and homes that have sold that the Zestimate does not have access to.
Thanks again for writing great articles!
Jeff
Excellent article. Finally, someone explains why my home and property keep going down. This article totally makes sense and even gave me a positive spin on my opinion of Zillow. Your explanation of why Zillow’s home values are not accurate makes so much sense. I hated them before this article. Thank you for this and for being so thorough.
Thanks for the compliments Jim. Zillow home values can be so misleading to someone who does not sell homes everyday. The general public often times relies on information they find on the internet. This is a bad move when it comes to valuing real estate. It is impossible for Zillow or anyone other online tool to accurately value a home with all of it’s many variables.
There seems to be a bias against Zillow by the agents in this thread. I have recent experience having sold a house in September 2015. I looked at the Zillow estimate which was $284,000. I had two agents give me their estimates. One local another from a major national agency. The national agent came in at $245,000 the local agent at $279,000. We priced at $285,000 and sold a week later at $293,000.
I look at the Zillow value of my current home. We are in a private community with 2 miles of private beach, two 18 hole golf courses, an Inn and restaurant on the beach, a pool on the beach with a bar. The home next to us sold for 1.1 million and the one across the street for 2.1. Ours is much smaller than a cape and is valued on Zillow for $567,000. I believe this is fairly accurate. Zillow seems to value by the entire town, not our private community.
So Zillow requires some interpretation but I don’t think it is inaccurate as this article suggests
Alan do you even hear what your are saying? You sold your home for $293,000 but Zillow valued it at $567,000? I will repeat – Zillow home values are completely inaccurate and should never be used for the basis of making any kind of real estate decisions!
The other problem with Zillow is that they tweak their algorithms all of the time, and use that to “rewrite history”. What I mean is that they seem to generate the historical home values for the house, town & zip code using the algorithm de jour, which has the effect of changing the entire historical record from what Zillow actually claimed in the past.
This really shows up when they display the graphs of their historical home values for the house, town & zip code. Most people don’t notice this unless they manually keep a record of Zillow Zestimates over the years or collected screenshots of years of past graphs. I do keep a record for my home, mainly as a “straw man value” in Quicken for rough net worth calculation purposes (adjusted for the real assessments done when I refinanced).
When I plot the Zestimate values I manually collected since Zillow first came on the scene in Massachusetts, and compare that graph to the what Zillow graphs today as the historical values of my house, town & zip code, the graphs are not just way off, the curve shapes are often way off. (i.e. The difference isn’t just a rescaling of the data.)
Bill, I really like and appreciate your blog. I can see the time and energy to put in to these detailed posts. A lot of blogs have OK information but never this thorough. I have referred several of my buyers to your blog in they’ve all thanked me for it. I appreciate your thoughts on how inacurate Zillow estimates are.
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency. Over the past number of years, Zillow has grabbed the world’s attention much the same as Uber did for transportation. Yet much like Uber, we see the inefficiencies of this technology, and it’s not pretty.
Often the side effects of technology are their downfall because the creators tend to overlook this when planning their world domination strategies.
Suzanne that’s very true. What amazes me sometimes is why Zillow which has a sterling reputation otherwise, would want to publish inaccurate data on their site regarding home values. Those in the know are constantly bashing Zillow estimates and with good reason.
I’ve been doing a survey of home sales in the Bethlehem, PA 18017 and 18018 zip codes. After watching the results of over 300+ sales in the last 18 months, I can tell you that most homes don’t move until they are within 3-5% (+/-) of a Zillow Zestimate.
Right or wrong, Zillow has created a buyer reality. When sellers agree with Zillow, their homes sell. When a home closes for 10% over Zillow (haven’t seen any exceptions to this in the $200K to $400K range) it is always clear why that price was achieved (quality and location) and the transaction is closed in 30 days or so.
The largest unexplained reality is why so many quality homes fail to sell at prices well below their Zestimates. In other words, in this market it’s clear why homes aren’t selling — overpriced according to Zillow with no apparent reason for the asking price — but it’s inexplicable as to why so many homes that should be selling below a Zillow Zestimate just aren’t. In the case of the latter, the only thing that might be consistently affecting this is a slow descent in price over a long period. (i.e., a suspiciously stale listing).
Listing your home for $50K to $150K over Zestimate, then coming down $10K per week, every couple of weeks, is no way to reach where you should have been at the opening. Buyers appear to shun these homes. Perhaps they just don’t trust the sellers of such properties. Here you find the most flippers.
I am furious with Zillow for purposely posted false sales of my house and cheating on the true estimate of value of my home. They deliberately posted all the lowest-priced sales in the area and used none of the avg and higher-priced sales.
LOL. I just went to Zillow to see the value of my condo. I had a good laugh. The condos on both sides are exactly identical to ours. They have the same features, same yard size, and also same exact condition. There is a thirty thousand difference in their Zillow estimates between our 3 houses. DUH! Can anyone really trust Zillow? We sold our home in another state last year and the Zillow estimate was 40 thousand less than what we sold the house for. We also sold it in 5 days as we priced it lower in order to sell it faster.