How accurate are "Zestimates" on Zillow?

Specialist · Allentown, PA · Member since 2017 · 25 posts · 9 votes

Hey everyone,

I'm currently educating myself about Rental properties before I go and purchase one myself. I'm practicing doing rental analysis, but some of the homes on Zillow are priced REALLY low yet look like they're in decent condition. I was wondering how accurate some of the home estimates are.

For example, the home i'm currently looking at is $100,000 yet the Zestimate is showing $283,145. (New Jersey). Homes around the area are prices between 230k-400k.

3 Bed 2 Bath

Rent Zestimate is $2,000 per month.

Would really appreciate some insight on this.

Thanks.

0 Reply

141 views

Most Popular Reply

Christopher Phillips

Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes

Parth Patel Don't even look at the zestimate. The numbers are worthless and no serious investor or professional will take you seriously if you mention zestimate in public. The numbers are averages. They don't use comps. Take no consideration for location, scenic views, or being next to a toxic dump. They have no way of knowing the interior or exterior condition of a house. If you want to understand comps, there are a zillion videos on YouTube showing how to do a CMA.

4 Reply

See this reply in the discussion

25 Replies

Jump to latestLatest

Sort by

Jameson Kaye
Investor · Seattle, WA · Member since 2013 · 14 posts · 7 votes
9y
Zestimate is looking at the entire zip code and general market trends in populating that number. I would like to say they are ball park figures at least here in SoCal. For New Jersey it could be a totally different story, is it close to rail way tracks? What are the houses like in the neighborhood? Look at the sales history towards the bottom of the house's page? Is the growth in price warranted for that area? With it being nearly $183,000 difference between the list price and zestimate there is a reason that house is priced that way either an under lying factor such as zoning, un-permitted work, excessive localized crime, or could be a thousand of other variables. I recommend talking to a real estate agent and have them send you over the MLS listing and read the notes and if they are willing a comparative market analysis. If you are close by take a drive by the property. Would you pay $283,145 for the house?
2 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y
I check all of the properties we own once in a while on Zillow and the numbers are accurate to about 10% or so in my area. So I would say they will get you into the ballpark but you might be sitting in the nosebleed section.
Podcast Guest on Show #243
Skyline Properties
View Page
1 Reply
Dana WhickerPro Member
Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
9y
I my market the Zestimate is worth within 20% of what Zillow charges for it.
1 Reply
Parth Patel
OP
Specialist · Allentown, PA · Member since 2017 · 25 posts · 9 votes
9y
Originally posted by @Jameson Kaye:

Zestimate is looking at the entire zip code and general market trends in populating that number. I would like to say they are ball park figures at least here in SoCal. For New Jersey it could be a totally different story, is it close to rail way tracks? What are the houses like in the neighborhood? Look at the sales history towards the bottom of the house's page? Is the growth in price warranted for that area? With it being nearly $183,000 difference between the list price and zestimate there is a reason that house is priced that way either an under lying factor such as zoning, un-permitted work, excessive localized crime, or could be a thousand of other variables. I recommend talking to a real estate agent and have them send you over the MLS listing and read the notes and if they are willing a comparative market analysis. If you are close by take a drive by the property. Would you pay $283,145 for the house?
I never thought of taking into consideration those kinds of variables. I have no intention of purchasing the home, I was just wondering why there was such a huge price difference. I'm still in the process of learning how to do an accurate analysis and this information will be very valuable. Thanks a lot for your insight.
0 Reply
Parth Patel
OP
Specialist · Allentown, PA · Member since 2017 · 25 posts · 9 votes
9y
Originally posted by @JD Martin:

I check all of the properties we own once in a while on Zillow and the numbers are accurate to about 10% or so in my area. So I would say they will get you into the ballpark but you might be sitting in the nosebleed section.
Thanks a lot, I'll use the zestimate as a ballpark estimator.
0 Reply
Patrisha Leybovich
Real Estate Agent · Chandler, AZ · Member since 2016 · 53 posts · 34 votes
9y
Those sites are crap and a waste of your time. Do yourself a favor and hook up with a good RE agent who will set you up on some subdivision searches for MLS rentals. This will keep you accurate. Second - Stick to checking craigslist, etc. for real-time rental feedback.
AND ALWAYS DRIVE THE HOODS AND CALL FOR RENT SIGNS!
Then you'll know for sure.
3 Reply
Christopher Phillips
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
9y
Parth Patel Don't even look at the zestimate. The numbers are worthless and no serious investor or professional will take you seriously if you mention zestimate in public. The numbers are averages. They don't use comps. Take no consideration for location, scenic views, or being next to a toxic dump. They have no way of knowing the interior or exterior condition of a house. If you want to understand comps, there are a zillion videos on YouTube showing how to do a CMA.
4 Reply
Account Closed
Rental Property Investor · Miami, FL · Member since 2014 · 80 posts · 55 votes
9y
@Christopher Phillips nailed it. Zestimates are worthless.
2 Reply
Parth Patel
OP
Specialist · Allentown, PA · Member since 2017 · 25 posts · 9 votes
9y
Patrisha Leybovich Christopher Phillips Bret Faszholz Thanks so much guys you have no idea how much that helped me out. I've already started looking up CMA videos. Will definitely ignore zestimates from now on. Are there any other websites I should use in terms if market analysis? I'm already using city-data. I'm planning on making my first investment in either NJ or PA. Still have a lot to learn but i'm hoping to be proficient enough to invest by June! Thanks again
2 Reply
Judy Parker
Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
9y
@Parth Patel You found a house in New Jersey for $100,000? I suspect it is trashed inside. And Zillow has never been inside the house to confirm condition.
0 Reply
Jeff Filali
Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
9y
The Zillow numbers can give you a general idea starting point, but too much variables go into them and they are too broad. For example, say a home sells very cheap in foreclosure, that number will drive the Zillow number way down, then you turn around and sell it for more and it goes way back up.
The only thing I use Zillow for is you can usually see photos of homes if they've ever been listed on Zillow, also you can search the recent comps sold to help get a better idea of a home's value. But before buying I always do more research.
0 Reply
Justin B.
Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
9y
The thing is about Zillow and other similar sites are that they can be dead on or completely off. I've seen them be within $1k of the appraisal and off by 100% (in both directions). I wouldn't go as far as to say they are worthless and crap, but if the only thing you base what you're doing is on Zillow, that will get you into trouble. It's not a bad place to "look", but you really have to do your own comparison looking at houses that have sold that are similar and what they are going for. While I may peak at Zillow to see what it says, I never put any weight on it and just use it as a hopping off point to drill down and do my own comparisons.
The short answer is never use Zillow as your only resource.
1 Reply
Robert S.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
9y
Judy P. House definitely not in Dumont, or anywhere in Bergen County North of Route 4 for that matter, lol. Parth Patel Zillow is a computer program, not a live person using concrete data to evaluate a property. Great example of how a computer program can't substitute due diligence, multiple towns with obvious different school systems and real estate values that share the same zip code. Zillow can't recognize the difference between towns because it only uses zip codes. However, this exact issue causes Zillow to be off by ~$100k in my primary residence. IMO, it's a service best suited for retail home buyers just starting out.
1 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
9y
Trulia, realtor, homes, Redin all have estimates. Trulia an Zillow are owned by same company quess what. A complete waste of time trusting these AVMs.
0 Reply
Jefferson G.
Investor · Matawan, NJ · Member since 2015 · 111 posts · 29 votes
9y
@Parth Patel Don't use ZEstimate, always stick to the basic and look for comps, recently sold properties within the area you are trying to look for and base the price on those comps. By the end of the day that is how Bank Appraiser will do estimate if the property is right for the price for Bank to do loan on the actual Retail buyer. Bank will now approve loan if the price is way too overpriced than what it is really worth.
0 Reply
Brett Dawson
Professional · Brecksville, OH · Member since 2017 · 43 posts · 10 votes
9y
Only at face value, I wouldn't base a purchase on one by any means. Be sure you are running a comparative analysis. Either set up your own system or use a qualified realtor.
0 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
9y
Truism #1: RE Agents hate Zillow and will tell you to ignore them I find Zillow zestimates reasonably accurate in dense urban neighborhoods, with conforming structures. In sparse rural areas with a paucity of comparable sales their estimate formulas don't calculate well
1 Reply
Charlie Price
Rental Property Investor · Niceville, FL · Member since 2017 · 88 posts · 136 votes
9y
I look at Zillow often. I agree with the comments that Zillow is one tool of many to use. At the homes I look at it seems that it is close about 80% of the time. Zillow of course does not take into account the odd ball or different properties and unique situations. But as a general rule of thumb I find it fairly useful.
0 Reply
Jash Sayani
Investor · San Jose, CA · Member since 2016 · 30 posts · 5 votes
9y
I believe they are comps from similar properties nearby that were sold. Pretty similar to what most appraisers look at.
0 Reply
Chris Purcell
Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
9y
It's 2017. Zestimates are a joke
0 Reply
Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
A house is worth the amount that a buyer is willing to pay for it.
I know that doesn't answer your question but I just sold a $225,000 house for $250,000 (a $25,000 mark up) because I was willing to do owner financing. I make more money, long term, safely that way.
Redfin offers a Tab that tells you what houses have actually SOLD in the area in the last 3 months. I think that is the cheapest "rule of thumb" to use for a general price. Try to find ones that are within 6 to 12 blocks of your "subject" house.
I have found real estate agents will differ $50,000 on the same house. Why does that make sense? One agent wants to sell for the best interest of the seller and the other wants to make a commission and sell as quickly as possible.
1 Reply
Paul Smythe
Investor · Greenville, SC · Member since 2012 · 269 posts · 187 votes
9y
The Zestimate rental rates can actually be pretty accurate, but I would never use the home value Zestimate for anything other than a throw-in marketing piece to a buyer.
1 Reply
Zachary H.
Rental Property Investor · Conway, AR · Member since 2017 · 146 posts · 75 votes
9y
Thank you @Parth Patel for starting this post. I have always thought that Zestimates are very, very rough estimates and have always been skeptical (especially when they show our houses being worth less than what we paid :-). But we just had one of our B&H houses that we paid $80k for go up to $102k Zestimate within the last year. Obviously I'm skeptical, but sometimes I get excited to see that. I never take the Zestimates seriously and always get a professional to appraise our houses before buying and selling.
1 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
I wrote this article a while back...maybe it can help shed some light-
https://www.biggerpockets.com/renewsblog/2016/01/1...
It doesn't get hardcore specific about the Zestimates, but at least things to consider.
0 Reply
Odie Ayaga
Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
9y
@Parth Patel since you're buy and hold it doesn't necessarily apply as much to you, but I wouldn't blindly throw Zestimates out. I wouldn't rely on their value in your purchase but as @Paul Smythe touched on if you were or end up flipping consider that you're end buyers probably don't surf Biggerpockets and know how dubious those numbers can be. If your buyers are discovering your property on Zillow and your listing price is $50K higher than the Zestimate listed directly below it you may be sitting without offers without the opportunity to explain to them why they shouldn't pay any attention to that Zestimate. But again you aren't flipping just food for thought.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.