The Zillow Zestimate: Can it be Trusted? (2024)

Posted on Jan 01, 2022

If you've ever used Zillow.com, you've probably encountered the Zillow Zestimate. Just how accurate is the Zestimate - and is it a good idea to sell with Zillow? Here's what you need to know.

The Zillow Zestimate

So what, exactly, is the Zillow Zestimate? This is Zillow’s proprietary home valuation tool, which can deliver an online estimate of value for most homes in the U.S. It relies on both public and user-submitted data, and its accuracy is partially dependent on just how much relevant data is publicly accessible. Some homes, for example, may have an unknown number of bedrooms - which impacts Zillow’s ability to price it accurately.

There’s a few terms that are important to understand:

  • Estimated home value: an approximate amount your home would sell for, based on what other, similar properties have recently sold for.
  • True market value: what people are actually willing to pay for a home.
  • List price/asking price: this amount is set by the homeowner, on the advice of their agent. It may or may not reflect the true market value.

Because homes on the market have more info publicly available, their Zillow Zestimates tend to be a more accurate reflection of value than homes that are off market (such as yours, perhaps).

Zestimate launched in 2011 and was quickly an industry game changer. Its inception has been both welcomeand controversial.

Zestimate was embraced by consumers, because it allows them to gain valuable information about their home’s worth with a single click. Before, this process may have involved identifying a lot of individual data points and talking to a local Realtor. Now, homeowners can do a quick, casual check on their home’s value every month if they want.

However, Zestimate has also been controversial, because it’s not an appraisal - but consumers often treat it like one, which can lead to a misunderstanding of how much their home is really worth. These misunderstandings can have real-world consequences if consumers misprice their homes. But more on this below.

How accurate is Zestimate?

The Zestimate is often less accurate than your Realtor's estimate and can be thousands of dollars off. According to Zillow’s Zestimate page, “The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 7.5%. This means that the Zestimates for half of all on-market homes are within 2% of the selling price, and half are not.”

This may seem like a negligible percentage - and for some homes, it is.

However, take the example of a home with a true value of $600,000. If the Zestimate is 7.5% off, the home Zestimate could be as high as $645,000 or as low $561,000. And 7.5% is only the U.S. median - in a market like Pittsburgh, where the median error rate is 11.3%, the Zestimate range jumps from $532,200 to $667,800 for a $600,000 home - a range of over $100,000.

According to Real Estate Decoded, this breaks down to a typical error of $18,000 for an unlisted home.

The Zillow Zestimate: Can it be Trusted? (2)

Duvora's 2019 case study “Exactly How Bad Are Zillow “Zestimates?” samples three homes per city in three major cities (Chicago, New York, Los Angeles). The study, which selected homes at random, indicated just how wide this range could really be. For homes in LA, the Zestimate was fairly accurate - hovering close to -5% for all homes. The New York homes, though, were all dramatically undervalued by the Zestimate.

The author of the case study concluded that one issue was that the Zestimate, due to its reliance on comparables (past sales), often can’t pick up on the rapid price surges that happen in a seller’s market (which won’t necessarily be reflected in past sales).

Here is how an example home fared in each market:

  • Chicago: Sold -9.45% below Zestimate
  • New York: Sold +60.07% above Zestimate
  • Los Angeles: Sold -4.9% below Zestimate

So: while the Zestimate can give homeowners an idea of very basic worth, it can also be pretty misleading.

Can you dispute the Zillow Zestimate?

Many homeowners worry that when the Zillow Zestimate is such a widely used tool by homebuyers, a lower Zestimate can adversely affect their ability to sell their home. After all - if a buyer thinks your home is worth $200,000 after visiting Zillow, it’s going to be harder to convince them to pay your asking price of $240,000. (There was even a Zillow Zestimate lawsuitby homeowners for this reason - but the court sided with Zillow.)

So how can you update the Zestimate?

  • The first thing you should do is register with Zillow and claim your property. Once you’ve verified your identity, you’ll be able to edit information like how many bedrooms you have, remodeling details, etc.
  • Zillow uses public tax records as the basis of off-market Zestimates, so having your home appraised - and therefore updating the public tax records - will ultimately impact the Zestimate.

If you can, it’s a good idea to double check your Zestimate before you go to sell so you can work to resolve any inaccuracies, since it may take time for these changes to be reflected in the Zestimate price.

What sort of factors impact Zestimate accuracy?

You know now that the Zestimate can be off sometimes: what factors play into this? It turns out, there’s a few big ones.

"Zillow can't see inside your home, they don't know what features it has, they don't take into account upgrades you may have, and it doesn't take into account your neighborhood versus another neighborhood in the same zip code," explainsBaltimore-based listing agentJune Piper-Brandon.

Consider how relevant these are to your home and neighborhood:

Home improvements

According to a 2019 report from Trulia, about 90% of homeowners surveyed planned to do a home renovation - with the bathroom and kitchen being the most cited projects. Our “Should You Renovate Before Selling?” guide has more specific information on important metrics like ROI - but in general, these projects add value to your home. Projects like bathrooms and kitchens, though, often don’t require permits - which means the Zillow Zestimate won’t be automatically taking them into account.

Housing turnover

Hot neighborhoods are easier to price than neighborhoods with slow turnovers, since recently sold homes mean more comparables.

The Neighborhood

Zillow often can't break down data street by street - since comp. homes might be further away - yet most homeowners are aware that some streets fare better than others on the housing market, especially in dense urban neighborhoods.

The Algorithm

Zillow is constantly adjusting the algorithm it uses to determine the Zestimate. Remember, it’s a computer that decided this - not a person. You may see your Zestimate go up or down over time when Zillow updates how it weighs different data points in the algorithm.

The Zillow Zestimate: Can it be Trusted? (3)

Piper-Brandon explains all this at greater length:

"Zillow will take all the homes in a zip code and bundle them together, and then average all the single family homes with about 1,500 square feet and 3 bedrooms and 2.5 bathrooms together - and that's the value they give.

So, for example in 21060, a zip code in Anne Arundel County, they will take a 1032 square foot rancher - some have a basem*nt, some don't, but Zillow doesn't differentiate and one street is really nice with desirable homes, one has several distressed properties and the homes aren't as well kept but again - Zillow doesn't differentiate.

So, your home is on the nicer block, but the value will be lower because it is compared to others on a worse block, whereas the ones on the worse block are higher but in fact the value is lower and less desirable. That's why you need a Realtor that is familiar with the demographics and dynamics of the community, rather than a computer on the other side of the country."

Why the Zestimate can impact your home selling experience

As any experienced Realtor can tell you, emotions influence how we buy and sell homes. Fall in love with a great house that you “have to have,” and it’s harder to make logical financial decisions when it comes time to bid. Similarly, if you believe the Zestimate to be more or less accurate - only to have a professional appraisal indicate your home is worth far less - you may struggle to feel good about the selling process.

Confirmation bias also means that people are more inclined to believe data that backs their beliefs - and it’s well-known in the real estate industry that people often believe their homes are worth more than they actually are. Even if you know there’s a possibility that the Zestimate has overestimated your home by thousands of dollars, because it matches your belief about your home, it can unduly influence you to treat the Zestimate as “accurate.”

You may even overprice your home with the hopes of obtaining the Zestimate number, and fall into the trap of having fewer interested buyers - which means staying on the market longer, and eventually having to discount the price.

What you can do to get the most accurate reading of your home’s value

Understanding your home’s true market value can help you decide whether, and when, to sell. Here are a few ways you can better understand your home’s value.

  • Make use of competing home value tools available through Redfin, Realtor.com, and Trulia. According to Marketplace, Redfin’s estimation tool is more accurate for homes on the market.
  • Take a closer look at the comparable homes that have sold in your area. Since you know your neighborhood and the general condition of some of the homes there, it may be easier to see that Zillow’s Zestimate prices your home the same as your neighbor’s - but you know you’ve updated the kitchen, installed a new HVAC system, and taken out the outdated carpeting, and they haven’t.
  • Talk to an experienced local agent, who can view your home and give you a knowledgeable and more precise estimate of what your home is worth.

Talk to a Houwzer agent about your home's worth

Should you sell your home to Zillow?

You may have heard that Zillow buys homes from homeowners. In 2021, however, Zillow decided to shutterthe iBuyer side of its business - meaning that you can no longer sell a home to Zillow directly (though many of its competitors still exist).

This was big news, especially because Zillow was using its own Zestimate to make offers - but the tool was too out-of-line with the actual value of homes for it to be a successful business model for them. In other words, Zillow's own failure to launch in the i-Buyer space only highlighted the potential inaccuracy of their Zestimate tool.

If you decide to work with an alternative i-Buying company, here's what you should keep in mind:

  • You may get to skip dealing with buyers, but there's often no discount: most i-Buyer companies charge you extra for the convenience.A typical seller might paya 6% agent fee, 1-2% closing costs, a 3% service charge, and deductions for repairs.
  • Homes sold to iBuyer companies tend to net owners less profit than they would on the open market, precisely because there is no competition or negotiation; you either accept the price they offer, or you can’t sell a home to them.
  • However, selling with iBuyerscan be a good option for homeowners who are dealing with distressed property, inherited property, or an extreme time crunch that makes it more appealing to quickly sell a home - rather than focusing on making the most profit from the sale.

If all you’re looking for is seamless communication and a less stressful real estate experience, though, modern brokerages like Houwzer are usually a better option. Experienced agents can guide you through the process, while also making sure you net the most profit possible from your sale.

For further reading

  • Is Zillow Trustworthy? Everything You Need to Know
  • Should I Buy a House in Spring 2023 or Wait?
  • Can the Redfin Estimate be Trusted? What Home Sellers Need to Know

The Zillow Zestimate: Can it be Trusted? (2024)

FAQs

The Zillow Zestimate: Can it be Trusted? ›

How accurate is the Zestimate? The nationwide median error rate for the Zestimate for on-market homes is 2.4%, while the Zestimate for off-market homes has a median error rate of 7.49%. The Zestimate's accuracy depends on the availability of data in a home's area.

How reliable is Zillow Zestimate? ›

Accuracy of Zestimates

According to Zillow's website, Zestimate's nationwide median error rate for active listings is 2.4%. 3 For off-market homes, it's now 7.9%. 4 Zestimates are only as accurate as the data behind them.

What to do if a Zillow zestimate is wrong? ›

What to Do If Your Home Value Is Listed Inaccurately
  1. Update Your Home Facts. If your home is not currently for sale, you can update facts about it online for both Redfin and Zillow. ...
  2. Review Your Home's Tax History and Sales Prices. ...
  3. Contact Customer Service If Necessary.

Is zestimate close to appraisal? ›

Limitations of Zestimates

Online estimates are algorithm-generated values based on available data, not certified appraisals. Algorithms can't account for all property details or do an in-person evaluation like a licensed appraiser, so estimates may differ significantly from an official appraised value.

What is more accurate than Zestimate? ›

Zillow: Redfin is more accurate when valuing homes. Both Zillow and Redfin give homes an approximate value, but the Zestimate provided by Zillow has proven slightly less accurate than Redfin's estimate. Final numbers depend significantly on the local market and demand for a property in your particular location.

What is the most accurate home value estimator? ›

15 Most Accurate Home Value Estimator Sites
  1. Zillow Zestimate. Zillow's Zestimate tool is perhaps one of the most well-known home value estimators. ...
  2. Redfin Estimate. ...
  3. Trulia. ...
  4. Realtor.com. ...
  5. Eppraisal. ...
  6. HomeGain. ...
  7. Chase Home Value Estimator. ...
  8. RE/MAX.

Why are Zillow estimates so low? ›

There are several reasons why Zillow's Zestimate may be inaccurate. For one, the feature relies heavily on publicly available data, such as property tax records and past sales data. This means that it may not take into account certain factors, such as renovations or additions to a home, that could affect its value.

Did Zillow get sued for Zestimate? ›

A federal appeals court sided with Zillow in a long-running lawsuit over the accuracy and marketing of the real estate giant's controversial Zestimate tool.

What causes Zillow zestimate to increase? ›

The amount of data we have for your home and other homes in your area directly influences the Zestimate. So you can make your Zestimate more accurate by providing more information about your home. The first step to doing that is to claim your home and edit your home facts on Zillow.

How do you manipulate Zestimate? ›

You can't directly change your Zestimate, but you can influence it by updating your home's information. To update your Zestimate, you need to claim your home on Zillow, then update key information such as the number of bedrooms, number of bathrooms, and square footage.

Are appraisals usually higher or lower than Zillow? ›

So, is Zillow's Zestimate accuracy higher or lower than appraisal values? The truth is, it varies case by case. Rather than leaving your home's worth to chance, consult trusted real estate advisors with intimate community insights.

Does a messy house affect an appraisal? ›

The standard, professional answer is, of course: “No, it won't affect value. Appraisers are trained to look at the structure and layout of the house, and overlook the sinkful of dirty dishes. Don't worry.”

What increases the value of your home appraisal? ›

Updates like new roofs, electric system upgrades, and even updates to the heating or air conditioning in the home are not aesthetic improvements, but can offer significant increases in appraisal values.

How does Zillow calculate likely to sell faster? ›

Homes with more page views and more pictures sell more quickly. Homes priced higher than their estimated market value sell more slowly.

Are Redfin estimates pretty accurate? ›

The Redfin Estimate is highly accurate, with a current median error rate of just 1.96% for homes that are for sale, and 7.43% for off market homes. This means that when a home that is currently on the market sells, the Redfin Estimate will be within 1.96% of the sales price half of the time.

How accurate are Trulia estimates? ›

That data is only shared with the Realtor community and tax entities. In some parts of the country, Trulia and Zillow are highly accurate — but those are areas with “open record” laws. In closed record states, Trulia and Zillow use tax appraisals for valuation. Again, in our market, the tax appraisals are inaccurate.

How accurate are Trulia and Zillow estimates? ›

How Accurate Are Trulia Estimates? Trulia Estimates are identical to Zillow Zestimates because both websites use the same data. The only difference is that Zillow Zestimates show both on-market and off-market properties, but Trulia only shows off-market estimates.

How accurate is Zillow and Redfin estimates? ›

Zillow and Redfin's home value algorithms are more reliable for general estimates than precise ones. Both companies are very accurate — about 98% — when estimating within 20% of a home's sale price. But that accuracy drops to just 77% when estimating within 5% of the sales price.

Does the A in Zillow stand for accuracy? ›

The phrase literally means that 50% of the time the Zestimate is within 2% of actual value and 50% of the time it's not. The median accuracy rate is only within about 2% if the property being Zestimated is currently listed for sale.

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