What’s Wrong With a Zestimate?



*Zillow.com screenshot


We have a lot of clients who love to use Zillow for all their real estate searching. And we get it...we love Zillow too! But you have to know it has some setbacks. For instance, we happen to know the above Zestimate is about $300,000 below the current market value for this home in Marin County, CA. There are a number of potential reasons for this inaccuracy. 

First, Zillow has no conception of the condition or the updates made to the home. This property is more updated than the other homes in this neighborhood and has high quality finishes in the kitchen and bathrooms. Zillow also doesn't know the square footage in the tax records for this house is inaccurate -  there was an addition made to the home increasing the number of bedrooms and therefore overall desirability of the property. 



Second, the actual data flowing into Zillow's Zestimates is not always accurate. Our clients will sometimes send us active properties from Zillow and ask why they aren't showing up as active in our MLS system. And when we check, we almost always find that the home sold months ago and Zillow just didn’t update their system. Zillow updates based on MLS data, but not always in a timely manner and sometimes not at all.

And this is problematic for more than just that one property that sold months ago. When Zillow doesn't update in real time, data doesn't show up and algorithms don’t calculate based on real data points. And because Zestimates are based on "comps" (other properties that have sold in the area), these estimates won’t be based on real data.

We have also recently heard that Zillow at times purposely maintains active statuses for homes that have sold so they can continue to drive traffic to their site. Remember they are a company looking for impressions and clicks so they are not necessarily in service of the most accurate data. They have their own agenda and showing you a beautiful house on the market for longer gets more eyeballs on their site and more money.

So all in all, Zillow has a lot of fun tools and can be a great resource, but take their data with a grain of salt. A Zestimate is not a replacement for a true market analysis from a real estate agent or appraiser. Sometimes this data can be wildly off, to the tune of hundreds of thousands of dollars!


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