Is the Zillow Zestimate® Accurate?

Article thumbnail

Updated 10/2024.

How Does Zillow Make Money?

A Zestimate takes into account the following:

  • Publicly Available Home Characteristics: includes basic data like square footage and the total number of bedrooms and bathrooms. If the home in question is not currently on the market, information from the last time it was listed is used.
  • On-Market Data: culled from active listings, including listing price, number of days on the market, and comparable recent sales in the area.
  • Off-Market Data: This data comes from other sources, such as prior sales and tax records. This is why you might find your home on Zillow’s website, even if it is not currently on the market.

How Accurate are Zillow Zestimates Today?

As Mark Twain famously quoted, “There are three kinds of lies: lies, damned lies, and statistics.”

The best way to understand its accuracy is to look at its numbers vs. actual numbers for a given area. According to Zillow’s most recent data on its website,  “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%.”

However, when you look at their updated chart in 2024, they are off by as much as 20% in the final sales prices on nearly 20% of homes, or about 1 in 5.

How Zillow Cheats to Make its Zestimate Look Better

Stick with me because this is not easy to explain, but important to understand. As you see above, Zillow’s off the market Zestimates simply can’t be trusted. Anyone with the most basic understanding of today’s home values can get within 20% of the final sales price with a wild guess. For example, in Portland the median sale price is around $500,000. That means the off market Zestimate could be $400,000 or $600,000 and Zillow would still say it was within 20% – that’s a massive ballpark when looking at real estate prices and simply not helpful when pricing a home to buy or sell.

Zillow’s on-market Zestimates look much better. Why? The information Zillow uses for active listings is updated when a real estate agent lists and prices a home based on their own professional expertise. Incredibly, the high accuracy rate for active homes is based on information provided by a Realtor’s research, not Zillow’s data. These estimates are based on borrowed information from a reliable resource – the local real estate agent. When Zillow relies on its own information, off market Zestimates, the margin of error very high, so high that no one should use it. Zillow is doing nothing more than looking over its shoulder to see what the smart student in class wrote down for their test answer – then they copy it down and post it online like they are responsible for the work.

The Data Used is Often Inaccurate

Zillow lost 881 Million Dollars in 2021 Because of Zestimate

Are There Better Options for Estimating the Value of Your Home?

The Best Way to Get an Accurate Home Assessment: Work with an Experienced Realtor

When selling or buying, you will always benefit from using a local, experienced Realtor vs. a large for-profit corporation. State-licensed Realtors put client needs first to grow trust, maintain a strong reputation, and fulfill their fiduciary duties. Since they are also performance-based, they are the best sources for knowing the local area and understanding of a home’s value. A large corporation willing to put out an inaccurate estimates is only putting its profits first, and those profits aren’t related to real estate sales.

Our experience gained from selling and buying homes for over 20 years in the Portland area works to your advantage. We can advise you local nuances and market conditions.

If you are considering selling a home in the next twelve months, reach out to our top 1% sellers agents. We offer a 1.7% commission rate to sell a home in the Portland metro and have completed over 2,000 local home sales. Get started by chatting with the bot on our site, or give us a call at 503-714-1111. We’d love to connect today!

Let's Connect
Contact us.

What My Clients Are Saying

I am so grateful for my choice in Stephen. Being able to have total confidence in him made the experience of selling my house stress free. He is friendly, focused, professional, and to the point. Best Realtor I have ever used, period.

Amy