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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Mike K.
Member since 2024 · 84 posts · 106 votes
2y
Quote from @Josh Mac:

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

Zillow lost hundreds of millions of dollars using their Z-Estimate to purchase properties. Considering this was during a strong market I would be very reluctant to trust it to make any investment decision. Zillow is a great tool if you carefully select your own comparable sales and listings and then take the time to analyze them.
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
2y
Zillow discloses their accuracy.
Go to their website, lower left corner in the footer, click on Zesitmate. You want to look at off-market and find your metro area. You can look at the median error. usually 6-8%. And 20% of the time they are 20% off.
What I found that it works pretty well in uniform neighborhoods like some of the older Milwaukee suburbs. The algorithm really struggles a lot in neighborhoods with a very diverse mix of home sizes and vintages.
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Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Marcus Auerbach:

Zillow discloses their accuracy.
Go to their website, lower left corner in the footer, click on Zesitmate. You want to look at off-market and find your metro area. You can look at the median error. usually 6-8%. And 20% of the time they are 20% off.
What I found that it works pretty well in uniform neighborhoods like some of the older Milwaukee suburbs. The algorithm really struggles a lot in neighborhoods with a very diverse mix of home sizes and vintages.

Thanks,I did find that disclosure recently,that's what brought on my question actually.Enjoy your weekend!
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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Josh Mac:

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

just use homes.com and the AVM from 4 appraisal company usually has 1 standard deviation with zEstimate is in the middle.

The accuracy really depends on the object property location and the sample.
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Tanner Lewis
Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes
2y
Abysmal. Look at comps yourself. The best comps are:
- sales in the last 6 months (last 3 months is optimal)
- within 5 miles
- same bed/bath count
- similar square footage
-similar condition (new build, recent rehab, average, good, etc)
This is what your lender/appraiser will mainly look at when determining the property's value. Going into a deal with bad comps can cost you thousands when you try to exit the deal.
1 Reply
Timothy Hero
Lender · United States · Member since 2020 · 1k+ posts · 499 votes
2y
It's extreme hit or miss. Have they gotten better with it? Sure, but they are still a mile off from time-to-time.

The neighborhood I previously lived at, was homes ranging in value from $525k - $650k. A few homes on the street, which were the same sq ft and built the same year as the $600k comps and same size lot, had Zestimates of $180k. Maybe it was an error, but it was a copy paste subdivision, and there were like 9 or 10 homes with that value.
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Mark Brown
Member since 2022 · 30 posts · 18 votes
2y
Zetimates are insanely off. I have a zestimate for $2,780 payment but instead I'm paying $3,798! Trust if you would like but I think for certain properties, with certain rates it will almost certainly be off.
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Pandu Chimata
Member since 2023 · 114 posts · 36 votes
2y
One of the site I use is - https://www.pellego.com/ for estimates. It also flags "flip" properties.
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Idriss Echrif
Member since 2024 · 6 posts · 3 votes
2y
I developed my own tool for this purpose. It not only displays comparable properties like Propstream does but also retrieves estimates from various sources, including Zillow, Redfin, Realtor.com, and others. It then presents each estimate individually, along with the average. I can share access if anyone is interested.
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Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Idriss Echrif:

I developed my own tool for this purpose. It not only displays comparable properties like Propstream does but also retrieves estimates from various sources, including Zillow, Redfin, Realtor.com, and others. It then presents each estimate individually, along with the average. I can share access if anyone is interested.

That sounds great,I would love to check it out,thank you!
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Mike K.
Member since 2024 · 84 posts · 106 votes
2y
Quote from @Pandu Chimata:

One of the site I use is - https://www.pellego.com/ for estimates. It also flags "flip" properties.

I ran my address through this tool. Keep in mind, I am a professional appraiser and there have been two model match sales in my neighborhood in the last 6 months, so I know what my house is worth with a 2% variance. This tool did not show either of the model match sales. It provided only 1 comparable sale that is 3 miles away. The "After Repair Value" provided is about 20% below the market value of my house. Not a reliable tool. Just use Zillow and look at similar homes in the same neighborhood and in nearby neighborhoods in the same city and school district. It's not rocket science.
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Pandu Chimata
Member since 2023 · 114 posts · 36 votes
2y
Quote from @Mike K.:

Quote from @Pandu Chimata:

One of the site I use is - https://www.pellego.com/ for estimates. It also flags "flip" properties.

I ran my address through this tool. Keep in mind, I am a professional appraiser and there have been two model match sales in my neighborhood in the last 6 months, so I know what my house is worth with a 2% variance. This tool did not show either of the model match sales. It provided only 1 comparable sale that is 3 miles away. The "After Repair Value" provided is about 20% below the market value of my house. Not a reliable tool. Just use Zillow and look at similar homes in the same neighborhood and in nearby neighborhoods in the same city and school district. It's not rocket science.

I do see such discrepancies on some examples. At times, the numbers it provides are more realistic as well. Not sure why it misses some.. At the end of the day, we need to look at multiple sources and inputs to estimate the prices.
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Josh Mac:

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

This is how you should do zEstimate.

max(5 same bed configuration/neighbour).

Basically you have to find the zEstimate for your neighbour.
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Mike K.:

Quote from @Pandu Chimata:

One of the site I use is - https://www.pellego.com/ for estimates. It also flags "flip" properties.

I ran my address through this tool. Keep in mind, I am a professional appraiser and there have been two model match sales in my neighborhood in the last 6 months, so I know what my house is worth with a 2% variance. This tool did not show either of the model match sales. It provided only 1 comparable sale that is 3 miles away. The "After Repair Value" provided is about 20% below the market value of my house. Not a reliable tool. Just use Zillow and look at similar homes in the same neighborhood and in nearby neighborhoods in the same city and school district. It's not rocket science.

correct, exactly like i said, the zEstimate comps from comparable house in the same complex could be wider as 1 std deviation.
but potential seller is also not accurate if they said their neighbour can sell for 1 mil and they expect the same while the house is only being able to be sold for $900k , for example.
I do notice, the market where DOM is strongest, the zEstimate would be more accurate.
If your DOM is above 50 then forget about to use it at all.
1 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Josh Mac:

Hello everyone,I was wondering how far off are zestimate prices on rent, and the price of a property?
not accurate, however if click on the Sold tab, this will provide accurate numbers
1 Reply
Jack Schwartz
Member since 2023 · 111 posts · 35 votes
2y
Quote from @Leo R.:

@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...
Leo's right. Zillow's estimate may miss important factors. Unique features boost value, but issues like pests or noise may not be accounted for. While Zillow is a good start, it's not everything. Feedback from friends and neighbors can also help understand market value.
1 Reply
Idriss Echrif
Member since 2024 · 6 posts · 3 votes
2y
That's why it's a smart move to obtain estimates from various sources, not just the major players like Zillow and Realtor. It's also worth considering the assessed market value from the county itself and averaging everything out. This approach can often be beneficial in negotiations with the sellers too
2 Reply
Mike K.
Member since 2024 · 84 posts · 106 votes
2y
Quote from @Idriss Echrif:

That's why it's a smart move to obtain estimates from various sources, not just the major players like Zillow and Realtor. It's also worth considering the assessed market value from the county itself and averaging everything out. This approach can often be beneficial in negotiations with the sellers too

As an appraiser, I can tell you it's not wise to trust the assessed value. The mass valuation techniques used by assessors are not very reliable. There are NO SHORTCUTS. Learn how to evaluate sales and listings of similar homes in the same neighborhood yourself using Zillow, Redfin, or Realtor.com data. I'm not making an investment decision based on an AVM and hoping it's accurate. Do. The. Work.
0 Reply
Idriss Echrif
Member since 2024 · 6 posts · 3 votes
2y
Quote from @Mike K.:

Quote from @Idriss Echrif:

That's why it's a smart move to obtain estimates from various sources, not just the major players like Zillow and Realtor. It's also worth considering the assessed market value from the county itself and averaging everything out. This approach can often be beneficial in negotiations with the sellers too

As an appraiser, I can tell you it's not wise to trust the assessed value. The mass valuation techniques used by assessors are not very reliable. There are NO SHORTCUTS. Learn how to evaluate sales and listings of similar homes in the same neighborhood yourself using Zillow, Redfin, or Realtor.com data. I'm not making an investment decision based on an AVM and hoping it's accurate. Do. The. Work.

Exactly what I'm saying here. In an earlier comment I mentioned the comps + estimates from different sources :)
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Kai Kopsch
Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
2y
Oh, you want a Zestimate of how close it is to the actual value? Well, let me put it this way: If Zestimate were a weatherman, it would be the one who predicts sunny skies while you're standing in a hurricane. But hey, at least it's consistent in its inconsistency, right?

1 Reply
Henry T.
Member since 2022 · 1k+ posts · 1k+ votes
2y
For every one that's close, the next one is way off. Recent sales will be the closest. Properties which haven't been sold in 10, 20, or 30 years, are most likely messed up. Zillow borrows heavily from local assessor data. Valuations will be off because there's no market determination, and an assessor has not seen the inside to know what's really going on. Marble counters, gold plated toilet, whatever, uncle Harry's kitchen cabs from 1920.
1 Reply
Henry T.
Member since 2022 · 1k+ posts · 1k+ votes
2y
For example...I saw a place that was zestimated 200k under all the neighbor houses. The day it listed, the zestimate and redfin went up to match the neighborhood. It sold 15 percent above zestimate. The whole thing is hokey.
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Mike K.
Member since 2024 · 84 posts · 106 votes
2y
The proof is in the pudding. Zillow tried to buy and flip houses based on their Z-Estimate and lost hundreds of millions. What more needs to be said?
1 Reply
Josh Mac
OP
Northwest Indiana · Member since 2024 · 83 posts · 34 votes
2y
Quote from @Henry T.:

For every one that's close, the next one is way off. Recent sales will be the closest. Properties which haven't been sold in 10, 20, or 30 years, are most likely messed up. Zillow borrows heavily from local assessor data. Valuations will be off because there's no market determination, and an assessor has not seen the inside to know what's really going on. Marble counters, gold plated toilet, whatever, uncle Harry's kitchen cabs from 1920.

Makes a lot of sense,thank you Henry!
0 Reply
Stephen Montez
Real Estate Agent · Las Vegas, NV · Member since 2024 · 50 posts · 18 votes
2y
Very inconsistent. The data they use can be extremely old or new and very rarely vetted. Use as a reference point sure but don't put that much faith into it.
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