How Accurate are Zillow Zestimates? What to Consider When Pricing a Home



Are you considering selling your home? If you are like most homeowners, your search for information will begin online. Zillow is one of the most popular sites to get information about home values, offering a “Zestimate” of potential home values.

But just how accurate are Zillow Zestimates? This is important information to consider before listing your home for sale because a pricing mistake could be a costly one.

Two Potential Zestimate Selling Scenarios

Here’s a look at two potential scenarios that could happen when sellers base their home prices on Zillow Zestimates alone.

First, you are an excited seller who visits Zillow and sees encouraging numbers. You list your home based on the information on Zillow, excited about the high dollar amount you saw. After a few months, your happy feeling fades when no offers come in for your home.

As your home sits on the market for month after month, the number of buyers are willing to pay for it continues to drop. When you do get an offer, you turn it down, holding out hope that someone will match that Zillow estimate. Soon, you become discouraged as your home continues to sit without a sale.

A second scenario could occur if you price your home far too low because of a low Zestimate. When this happens, your home may sell quickly, but it will sell under market value. Since you did not know its fair value, you lose thousands of dollars.

Clearly, you must know the answer to “How reliable is a Zillow estimate?” before using this tool as the basis of your home’s price. If you make the wrong pricing decision, you will pay dearly.

How Accurate Is a Zillow Zestimate? Consider the Zillow Pricing Algorithm

Before you look to Zillow to price your home, first consider the purpose of the website and parent company.

Zillow is a company that primarily makes money by selling ad space to real estate agents. In order to appeal to real estate agents, the site must have many interested buyers that visit. It uses price estimates to drive some of that traffic.

The company is not a real estate company and does not have licensed agents on staff. Thus, it uses an algorithm, not actual comparisons and knowledgeable analysis, to price homes.

While algorithms can be very helpful tools, they lack a human component. They cannot perfectly compute the nuances and subtle shifts of the real estate industry and the fickle nature of buyers. Thus, algorithms, even highly sophisticated ones, shouldn’t be the only tool you use to price your home.

Not only that, but Zillow does not do its own research. It uses data from other sources, including user-submitted data and other online information, plugs that data into the algorithm to come up with the pricing estimates. None of this data indicates important factors like updates or location specifics, which can impact a home’s potential selling price.

Because of this, the site never claims price accuracy on their estimates. Even buyers who base their pricing ideas off of Zillow often change their minds once they see a house in person.

Why Are Zestimates Inaccurate?

Understanding the Zillow algorithm gives a clear indication as to why the Zestimate is less accurate than information than that from a real estate agent, but taking a closer look at how the values are determined will shed more light on this problem.

User-Submitted Data and Third-Party Sources

First, Zillow uses user-submitted data in its estimate. This can lead to accuracy problems when users submit inaccurate figures, and the Zillow team fails to check the accuracy of this data. Some of that data will come from the home’s owner, and chances are high that the home’s owner will inflate the home’s value or report it in better condition than it really is. User-submitted data is highly subjective and thus prone to inaccuracy.

Not only that, but Zillow also relies on third-party sources for data. This includes the tax assessor’s data and the price and date of the last sale. Both of these sources of information can have inaccuracies and do not take into account current market conditions. Zillow has no way to vet the information that is available publicly to check for these types of errors.

Inability to Keep Up with Quick Changes

Second, Zillow is not able to keep up with the rapid changes in the real estate market in your area. Even if nearby homes sold just a few months ago for a certain amount, the market may have changed, and sometimes significantly, in that short amount of time.

Also, the algorithm cannot account for any repairs or updates that you performed, nor can it consider additions that comparable sales did not have, such as a finished basement or covered porch.

Inaccurate Comps

Finally, Zillow may not have any recent sales in your neighborhood to compare your home to, or the comps may be too broad to provide an accurate value for your particular part of the neighborhood. This further increases the potential for error in valuing your home.

Ultimately, only a real person with local market knowledge can consider all of the factors that Zillow tends to overlook. The Zillow service could be helpful if the company provided a value range, but because the site provides a hard number value, it steers a lot of homeowners in the wrong direction.

Remember, Zillow places a value on your home without ever seeing it. If you want a fair evaluation, you need to have someone who understands real estate come to your home and see it for themselves, confirming its value.

How Real Estate Agents Determine Home Value

Real estate agents, unlike Zillow, are real people. They can come to your home in person, studying its condition, upgrades, and location, to place a more accurate value on the property. Here’s how the process typically works.

When you first reach out to an agent, they will research your property’s location, looking for any features of that location that could add to or detract from its value. Homes on a busy street, for instance, may not be as appealing as homes on a quiet cul-de-sac. Homes that are far from major roads can be less appealing than homes near a major interstate.

Next, the agent will inspect the home in person to see its style and condition. This ensures that all of the information about the property and its condition is accurate. It also means that new HVAC or new flooring you just invested in will work itself into the value of the property.

After visiting the home, the agent will check comp sales for similar homes in the area. Then, the agent will perform market research to determine the current state of the market and how quickly homes are selling. At some point in the process, the agent will interview the home’s owner to learn more about the property.

Using all of this information, an agent can provide a fair and accurate evaluation of the home and its value. Unlike Zillow, the agent does not rely on algorithms or tools alone, but brings a human element to the equation.

Should I Discredit Zillow Entirely?

If you’re wondering, “How reliable are Zillow Zestimates” you may now find yourself wondering if you should ignore the tool altogether. The answer to this is no. Zillow provides an estimate of your home’s value that can give you a starting point for your pricing strategy.

It can give you information about local listings and recently sold properties. This information may help you determine if now is the right time to list the home. This insight is helpful, but ultimately you cannot replace the human touch with an algorithm when choosing your asking price.

Look at the information on Zillow, but remember that only a licensed real estate agent will be able to give you the most accurate estimate of your home’s value based on current market conditions.

If you are looking to sell your home and want to sell it quickly, consider selling to HomeGo. HomeGo has a team of experts in their local markets, but unlike selling with a traditional agent, HomeGo does not charge commissions or fees.

We can provide you a fast, accurate valuation of your home. With the help of the agents, HomeGo gives you an instant offer for your home in its current condition, and that offer is fair and based on current market conditions. If you’re wanting to sell quickly and with confidence that you’re getting a fair price, reach out to HomeGo today.


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