Zillow’s Zestimates® are used by millions of American homeowners to estimate the value of their homes at-a-glance. But you might be surprised to learn how inaccurate Zestimates can be.

In this article, we’re answering all of your Zestimate FAQs:

How accurate are Zestimates?
Why are they so inaccurate?
How can I get a more accurate estimate of my home's value (without paying an appraiser!)?

How Accurate are Zestimates?

As of summer 2022, Zillow reports that their Zestimate has a 3.2% median error for on-market properties, and a 7.52% median error for off-market properties.

This means that the Zestimate for the average American home that is listed on the market for sale is 3.2% off. And the Zestimate for the average American home that is not listed on the market for sale is 7.52% off. Which might not sound too bad…until you look at some real home values.

Let’s imagine that you’re thinking of maybe selling your home, but you haven’t listed it on the market. If your Zestimate is $1 million, the true value could be up to 7.52% lower or 7.52% higher. This means your home is probably worth somewhere between $924,800 and $1,075,200. That’s a gap of more than $150,000!

And that’s just the median error rate. Half of all Zestimates will be off by even more!

Why are Zestimates so Inaccurate?

There are a few reasons why Zestimates are so inaccurate:

Property information can be inaccurate. Zillow pulls data from county records and previous listings on other websites, so a typo in the original data can result in errors on Zillow. Data errors in square footage, lot size, and year built can dramatically impact the accuracy of a Zestimate.
Property details can be out-of-date. Zillow has no way of knowing the improvements you’ve made to your home. If you’ve renovated, updated the heating system, or made the house more energy-efficient, that’s not reflected in your Zestimate.
The algorithm may not choose the best comps. Residential real estate valuations are based on recent sales of similar homes (called comps). But Zillow might not know which homes are most similar to yours. Sure, the algorithm can compare square footage and the number of beds and baths. But information that is more difficult to define (like views, interior design, and plot location) is often ignored.
The algorithm may have inaccurate values for comp adjustments. Once comps are selected you need to make adjustments to the comps to reflect what their sales price would have been if they were exactly like your home. For example, say you live in a planned community where floorplans are the same, and a home across the development, near the highway, just sold. But your house is located far from the highway and backs up to a peaceful nature reserve. The sales price of the comp would need to be adjusted to reflect the higher price you can get because of the better location. But how much is that better location worth? Experienced, local real estate agents know, but Zillow’s algorithm probably doesn’t.

How Can I Get a More Accurate Estimate of My Home's Value?

You don’t have to make any buying or selling decisions based on Zillow’s inaccurate Zestimates. And you don’t need to pay hundreds of dollars for a formal appraisal every time you need to know the value of a home.

You can simply contact us at Sequoia Real Estate for a fast, free, and friendly custom home value estimate. We believe that buyers and sellers deserve to have accurate information before making any real estate-related decision. And we’re happy to provide a free value estimate and no-pressure consultation so you can make a well-informed decision.