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Jon R Roberts' Blog

By Jon R Roberts | Broker in Denver, CO

How accurate is the Zillow Zestimate?



Most in the Real Estate industry are familiar with the Zillow Zestimate.  Most non-Real Estate people are familiar with Zillow and their infamous Zestimate as well.  How valuable is this resource? I will tell you as a numbers centric Real Estate professional, it is a great place to get a VERY quick glance at value.  But a more thorough Market Analysis prepared by an experienced licensee is still the best path to a more accurate value. That or pay an appraiser. 

Why is this?  Because Zillow's Zestimate does not account for finishes, proximity to desirable or undesirable neighborhood features (think railroad tracks, a liquor store, a park, etc).  My biggest gripe is that Zesimates can't account for proximity to major neighborhood boundaries.  The Zestimate often crosses over these major boundaries and grabs sales comps that are much higher or lower than the subject you are trying to assess.

Guess what?  Zillow discloses their Zestimate Accuracy.  Here is the link to the page and the excerpt for my market (Denver, CO):

http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

Denver Homes on Zillow: 99%
Denver Homes with Zestimates: 99%
Denver Zestimates within 5% of Actual Sales Price: 26%
Denver Zestimates within 10% of Actual Sales Price: 46%
Denver Zestimates within 20% of Actual Sales Price: 68%

Look at that last statistic.  32% of Denver Zestimates are NOT within 20% of actual Sales value.  The Average Sales Price in Denver is almost $300,000.  20% is $60,000.  1 in 3 Zestimates is off $60,000 or more.

Comments

By Stephen B Holben,  Mon Apr 11 2011, 08:11
A Zestimate has no place in one's home shopping plans. The shortcomings noted above are just a few. In a growing and desirable community (like Denver) one neighborhood can be 100% different than one just across the street. (Think the neighbrohood between Lowry and Stapleton; an absolute no man's land of flotsom). In Denver, "scrapes" are popular. Zillow simply cannot begin to evaluate these. Zillow is one of several of these "wisdom from afar" real estate advertising platforms that have done nothing more than to obfuscate a process that takes local expertise.
By Jim McCowan (703) 395-0166,  Wed Apr 13 2011, 01:21
In my opinion, Zillow does more harm than good. People think, "If it's on the web, it must be true." WRONG!
By Neil Walton,  Mon Apr 18 2011, 15:05
Sometimes those Zestimates are so out in left field. I guess it's our duty to educate.
By Marianne Bandy,  Mon Apr 18 2011, 19:57
I am constantly amazed by how much stock consumers put in the Zillow values. I have to do a lot of explaining to get them to reality.
By Jon R Roberts,  Mon Apr 18 2011, 21:17
Marianne, I hear you. Me too. Maybe this weblink to Zillow Zestimate statistics will help!
By Allison Kennedy,  Mon Apr 18 2011, 21:39
Hey all above me.... I am so thrilled to see this post. Stop and think about who likes and regards the zestimates as REAL - the buyer and only the buyer. They are many times only a first time buyer who really in all fareness know no better. Sellers, having been through the process already at least once before totally freak and scream because they know how horribly off and wrong they are but I must say I have thankfully noticed that seasoned buyers recognize how ridiculous they are and will often say .... how on earth is that so!!!! I then explain why they are so inaccurate and they immediately agree it looked way too good to be true. We need to just teach and educate the first time buyers so they understand the reality of home ownership - remind them that one day they too will be sellers and do our best to make them see the wrong in the Zillow Way.
By Richard Simonsen,  Wed Sep 19 2012, 07:54
I am a Real Estate Broker and trying to battle one of Zestimates stupid values on a Condo . The unit is waterfront and the big Z uses comps 5 miles inland and in different towns . Yes people really think the internet is God, forget that I have 32 years in business and have no idea what I'm doing. What a joke.
By Ggsaw46,  Mon Jul 29 2013, 08:50
I have a condo in Chico CA that has rented via 1 year leases for the past 8 years. Rents have run from $1100 to a current $1300 per month. Zillow says the unit should rent for $500 per month! As an investor I know that rental property is closely akin to the income it can produce. Zillow places a "zestimate" at a full 50% discount to reality. Why would anyone place any stock in their opinion?
By tedsstuff,  Thu Mar 13 2014, 10:17
zillows Zestimate is a joke their prices are way off I was selling a 2bdrm 2 bath mobile home they said it was worth 125,000 I sold it for 17,000 I have also had clients come to me after they got a Zestimate and it had priced their home a lot higher than the market price Zestimate is a joke in my area.

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