How Accurate is a Zestimate?

Zillow scrolling has become all the rage in the last few years and there are memes and TikToks galore. As a real estate agent, I often have clients quote Zestimates to me but have you ever asked the question, “how accurate are Zillow estimates”? Let’s talk about it. {Would you rather watch than read? Scroll down for the video version of this blog post.}

What is a Zestimate?

A Zestimate is Zillow’s estimate of the market value of a house. It’s based on available market data but some of that data might not be accurate or it might be outdated.

How Accurate is a Zestimate?

I recently looked at Zestimates for a number of houses currently or recently on the market in my area and there was a $20,000 to $100,000 variation from the actual listing price. The question that needs to be asked is “how can it be that far off?”.

Zestimates are based on fair market value and anyone that’s trying to buy a house in this seller’s market, or who has bought or sold a house in a past buyer’s market, knows that “fair” might not be the first word that comes to mind. In a strong seller’s market, houses are selling quickly, often for well over asking, and there’s often low inventory. That means there are less comparable houses on the market and that makes it hard for an algorithm to effectively give an estimate.

Zillow admits to an error rate and they’ll also tell you that the error rate is higher for homes that are off-market {obviously}. There’s less data to pull. Zillow has no idea if you put in new quartz countertops recently or updated all the fixtures so there’s obviously more room for error. On the other hand, Zillow also can’t tell you if there are foundation issues or a disastrous roof. They can tell you how similar houses in the neighborhood are priced but they can’t accurately assess a house when it has variations.

In 2021, Zillow lost 880 million dollars relying on their algorithm. That speaks volumes about its accuracy.

True market value can’t be determined by an algorithm. It involves too many subjective factors and can only be accurately determined by an agent who is watching the fluctuations in the market {which sometimes occur from one day to the next} and who takes a physical tour of the interior of a home.

So what does this mean for a seller? The most accurate way to find out what your home is worth is to call me. I can give you a ballpark assessment of the market value based on what’s happening right now in this market, and if you’re seriously thinking about listing your house, I’ll do a walkthrough, ask pertinent questions, and let you know what we can list for.

The bottom line? Don’t put too much weight on that Zestimate!