How close is Zestimate?

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How close is Zestimate?

Josh Mac

Northwest Indiana · Member since 2024 · 83 posts · 34 votes

Hello everyone,I was wondering how far off are zestimate prices on rent, and the price of a property?

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

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Ned J.Pro Member
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
2y
a lot... a ton.... off the charts.... not even close...
Check real comps in area
5 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Ryan Porter:

It depends. They are close if there are good MLS comps in the area or good Zillow rental comps. When doing rental comps, I use the MLS, Zillow, Rent.com, Conrex, Evernest, and about ten other property manager websites that are local brokerages and manage over 100 homes. Usually, I can tell more from the local property managers than anything. If I see a few homes listed for rent in the area, I know I want to be at or cheaper than them or have a nicer home. I would make you a list of sites for quick use. Here is what I use in the Jackson, MS, area.
Rental Comps

Thank you for the advice Ryan and the link!
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
They can be close. Can be.....but they are bogus too. If you lower your price, their comps will drop automatically. Just because you chose to adjust your price doesn't mean it's immediately worth less. So their algorithm is skewed, but is sometimes really close. True comps are better.
Realtor.com uses 2 different algorithms that are usually lower than Zillow.
4 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Bruce Woodruff:

They can be close. Can be.....but they are bogus too. If you lower your price, their comps will drop automatically. Just because you chose to adjust your price doesn't mean it's immediately worth less. So their algorithm is skewed, but is sometimes really close. True comps are better.
Realtor.com uses 2 different algorithms that are usually lower than Zillow.
Thanks for the reply,how do you get the most accurate comps?
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Josh Mac:

Only one way. Go on the RE listing sites and find your own comps. Be very specific. First check houses for sale to get listing prices....then look at 'Sold prices' to see what reality is... The right number is somewhere in the middle....
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Charles Granja
Rental Property Investor · Kansas City/Chicago · Member since 2021 · 126 posts · 113 votes
2y
They are accurate and inaccurate. Hard to say for any "random" property when the sample size is so large.
4 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Bruce Woodruff:

Quote from @Josh Mac:

Only one way. Go on the RE listing sites and find your own comps. Be very specific. First check houses for sale to get listing prices....then look at 'Sold prices' to see what reality is... The right number is somewhere in the middle....

Thank you Bruce,when looking at the sold houses do you add in any additional factors if the house was sold awhile ago?Also I was trying to get my own comps on an older 3/2 ranch,but most the properties around it were newer or larger.Whats the best way to compare oranges to apples for lack of better words.
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Ko KashiwagiPro Member
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
2y
Hi Josh,
It's always best to get actual comps for accurate value estimation. Zestimates tend to be more accurate for on-market properties than off-market, and I believe Zillow publishes the accuracy metric for each city - so some cities are more accurate than others.
If you are going off of website estimates for a quick guesstimate, I tend to take the average of the estimates given by Zillow, Redfin and Realtor.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
The DIY Landlord Book4.7248 Reviews
Website View Page
16 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Ko Kashiwagi:

Hi Josh,
It's always best to get actual comps for accurate value estimation. Zestimates tend to be more accurate for on-market properties than off-market, and I believe Zillow publishes the accuracy metric for each city - so some cities are more accurate than others.
If you are going off of website estimates for a quick guesstimate, I tend to take the average of the estimates given by Zillow, Redfin and Realtor.

Thank you for your advice!
0 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Nathan Gesner:

I was thinking that before you even mentioned it lol!
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
Quote from @Josh Mac:

I just go farther out until I find something similar. Or just subtract $ for the extra size.....

1 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Bruce Woodruff:

Quote from @Josh Mac:

I just go farther out until I find something similar. Or just subtract $ for the extra size.....

Thanks,have a great weekend!
0 Reply
Leo R.
Investor · Member since 2021 · 591 posts · 695 votes
2y
@Josh Mac keep in mind that Zillow can be completely unaware of factors that affect value...and some of these factors might not be apparent until you see the property in-person.
For instance, maybe someone added a bathroom to the house, and now it's a 3/3, but Zillow thinks it's a 3/2. ...or maybe the house is right next to a busy road with tons of traffic noise, but the Zestimate is based on nearby houses that are on quieter residential streets ...or the main floor beam under the house is rotted out--Zillow would never know that...
In short, there are a ton of factors that can affect a property's value that Zillow might completely miss.
The Zestimate can be reasonably accurate in showing a ballpark value...but, I wouldn't make life and death investing decisions based on a Zestimate...
2 Reply
Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
I've read that they are within 20%, 80% of the time, best case scenario within 2% for listed properties and within 7% for unlisted properties. That means they could be off by several hundred thousand in my market, which does more harm than good in my experience. The colossal failure of their iBuyer program a few years ago showed the world the dangers that exist when the flaws of algorithm-based estimates are overlooked. To be accurate with comps you have to know the market intimately, go inside as many of the comps as possible: see, feel and smell them yourself and know how to adjust appropriately for many various things like appraisers do. It's too much to put in a simple post on here but if you want to learn and get good at it, you can take some appraisal classes. You'll need MLS access too as Redfin, Zillow and realtor estimates are all similarly flawed. You can also build a relationship with a good local agent and ask them to run comps for you, or in certain situations like selling a high-end home to a friend off market I'd recommend just paying for an actual appraisal. I've seen off market deals that relied on online estimates and missed the mark by half a mil.
3 Reply
Joe S.Pro Member
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
2y
They can be close until they’re not. 🧐
1 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Steve K.:

I've read that they are within 20%, 80% of the time, best case scenario within 2% for listed properties and within 7% for unlisted properties. That means they could be off by several hundred thousand in my market, which does more harm than good in my experience. The colossal failure of their iBuyer program a few years ago showed the world the dangers that exist when the flaws of algorithm-based estimates are overlooked. To be accurate with comps you have to know the market intimately, go inside as many of the comps as possible: see, feel and smell them yourself and know how to adjust appropriately for many various things like appraisers do. It's too much to put in a simple post on here but if you want to learn and get good at it, you can take some appraisal classes. You'll need MLS access too as Redfin, Zillow and realtor estimates are all similarly flawed. You can also build a relationship with a good local agent and ask them to run comps for you, or in certain situations like selling a high-end home to a friend off market I'd recommend just paying for an actual appraisal. I've seen off market deals that relied on online estimates and missed the mark by half a mil.

Thank you for a great explanation Steve.I know zillow was never on mark but I just wondered how far.You and all the others have cleared ot up nicely!Also thank you for the guidance and various ways on how to hone this skill.
1 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Joe S.:

They can be close until they’re not. 🧐

Don't want to find that out the hard way. 😀
0 Reply
Andrew Simms
Rental Property Investor · Marietta, GA · Member since 2017 · 131 posts · 101 votes
2y
Generally, I have found in dense areas where there are a lot of sales, it can be "close" but in more rural areas, not close... at all. But that's as general of an answer as the question. As everyone else said, pull your own comps.
1 Reply
Manny VasquezBusiness Member
Real Estate Agent · Orange County · Member since 2022 · 317 posts · 293 votes
2y
Its a crapshoot with Zestimate....I have seen it be "spot-on" and I have also seen it be way, way off. The Zestimate tool is an automated algorithm that takes data from its surroundings. If there is a lot of activity in the area (say a lot of rentals or sales) then I would say that the Zestimate will be a lot closer to the real thing. If there is not a lot of activity in the area then the Zestimate will be way off.
One thing to keep in mind is that Zestimate also doesn't factor in "aesthetics" nor does it factor in "ammenities". Zestimate just looks at the cold, hard facts......square footage, price per square foot, etc. It can't distinguish between nice or ugly, a factor that a prospective renter may pay more or less for.
When my clients call me to suggest a rental price, I use several tools to make that determination. For starters, I would suggest you continue to use Zestimate but also take a look at Rent-O-Meter, Apartments.com, Homes.com, Realtor.com and Trulia. Between all of these websites combined you will be able to get a really good idea of what to charge for rent. I hope this helps.
3 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
2y
The problem with Zestimates is it doesn't factor what it doesn't know. For example, my Zestimate was low because it didn't know about the addition, full remodel, and garage conversion into an ADU. Another great example is Zillow doesn't know about views, usable land or if a street is worse than another.
What Zillow is good for is you can search for sold comps, including what has sold off market. That is likely more useful.
0 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Manny Vasquez:

Its a crapshoot with Zestimate....I have seen it be "spot-on" and I have also seen it be way, way off. The Zestimate tool is an automated algorithm that takes data from its surroundings. If there is a lot of activity in the area (say a lot of rentals or sales) then I would say that the Zestimate will be a lot closer to the real thing. If there is not a lot of activity in the area then the Zestimate will be way off.
One thing to keep in mind is that Zestimate also doesn't factor in "aesthetics" nor does it factor in "ammenities". Zestimate just looks at the cold, hard facts......square footage, price per square foot, etc. It can't distinguish between nice or ugly, a factor that a prospective renter may pay more or less for.
When my clients call me to suggest a rental price, I use several tools to make that determination. For starters, I would suggest you continue to use Zestimate but also take a look at Rent-O-Meter, Apartments.com, Homes.com, Realtor.com and Trulia. Between all of these websites combined you will be able to get a really good idea of what to charge for rent. I hope this helps.

Thank you for the advice Manny!Love the knowledge everyone has to offer here,Enjoy your weekend!
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Halil C.
Investor · Ft Lauderdale · Member since 2023 · 22 posts · 13 votes
2y
When you look at the comps, try to compare it against the ones that are from the same neighborhood. Sometimes across the street or river/waterway makes a big difference.
1 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Halil C.:

When you look at the comps, try to compare it against the ones that are from the same neighborhood. Sometimes across the street or river/waterway makes a big difference.

Yeah for sure,thanks!
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
My view is it is fairly accurate if your property is similar to the majority of properties in the vicinity. The more unique the property, in both directions, the less accurate the zestimate.
1 Reply

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