Do You Actually Trust Zestimate When Evaluating Deals?

Question

I’ve been thinking about how often sellers (and even newer investors) rely on Zillow’s Zestimate when trying to determine property value.

On the surface, it makes sense — it’s quick, easy, and gives you a number instantly.

But in practice, especially with off-market deals, I’ve seen Zestimate be way off.

For example:

• It doesn’t factor in true property condition
• It ignores investor-specific metrics like ARV and repair costs
• It doesn’t account for seller motivation or deal structure

I’ve seen properties with a $350K Zestimate realistically trade closer to $220K–$260K once you actually break down the numbers from an investor perspective.

It seems like Zestimate works more as a general reference, but not something you’d rely on to actually make a buying decision.

Curious how others here approach this:

👉 Do you use Zestimate at all when evaluating deals?

👉 Or do you completely ignore it and rely on your own comps/analysis?

I’ve been exploring ways to use more data-driven approaches (including AI) to bridge this gap, but interested to hear how everyone here handles it.

Caleb Brown · Answer

I use actual sold comps from the MLS, no farther than 6 months and within 1 mile. Zestimate is an algorithm that is a guess.

Melanie P. · Answer

Zillow trusted their estimates enough to turn their computer loose buying and selling real estate. They lost $900 million. That program and a third of the Zillow entity evaporated along with the money.

The Ai and algorithms are just not there yet. They clearly will be someday. Tech and real estate firms have spent a lot of money trying to develop a machine generated comp with no success.

Steve K. · Answer

According to Zillow, the median error rate for the Zestimate for on-market homes nationwide is 2.4%. They state that off-market homes have a median error rate of 7.49%. In some markets they can be more accurate than others. I’ve seen zestimates be off by millions of dollars in my market, because we have a wide variation of home values on the same street sometimes. It’s an algorithm that uses data, but they don’t know if the homes that they’re comparing have been renovated or are dilapidated, what they smell like inside, if they are in different school districts that affect the value, etc. Wildly inaccurate and dangerous to trust for anything IMO. Really only an experienced professional with access to MLS and local market knowledge can pull accurate comps, and I don’t see that changing anytime soon. Ideally when I’m pulling comps, I’ve been inside the comps and definitely need to at least go inside the subject property, and I’m usually familiar with the market on a house by house basis because active realtors know their market very well. Two houses that have similar data recorded on them may differ by hundreds of thousands due to various factors, mainly condition, exact location, school district, city or county rules such as size restrictions that may limit what you can do with the property, or rental restrictions that may effect one property and not another, HOAs, historic districts, maybe subject property smells like 50 years of cigarette smoke or cat piss and the others don’t, has had a $1M remodel and the others haven’t, backs up to a mall or a liquor store or a highway and the others don’t, etc. etc. etc. there are way too many variables in the real world for an algorithm, basically the equivalent of a “desk appraisal” to be accurate. One dead giveaway is that zestimates change a lot in short periods of time. If they were accurate they wouldn’t do that because house prices typically don’t swing that wildly in such short periods of time.

Alex Ellwood · Answer

If you are buying to hold, I find my cash flow estimates much more relevant than trying to nail down market value. When buying to flip, be sure to include market price trends. They'll swamp the details of a zeroed in price estimate. Even then, holding is my backup if my market price estimate is wrong. Buy stuff you're able to comfortably hold if forced to.

Ryan D. · Answer

Any estimate is a subjective number to some extent. Which number to choose is heavily dependent on which side you are on - buy or sell. I look at various sources of estimates and then look at historical data but later I do my own estimate. But still, after 3-4 months of rehabbing, market can be totally different due to local employment climate shifts. You just can never be right but you can get close enough if you done your homework.

Stephen Quesinberry · Answer

Zestimate is really just an AVM (automated valuation model) that’s broad-based and meant to give a general reference point, not a deal-level valuation.

It pulls from public data, recent sales, and general trends, but it doesn’t truly understand condition, layout changes, deferred maintenance, or anything specific to how an investor would underwrite a deal. It also doesn’t account for things like renovation scope, ARV potential, or seller motivation, which are often the biggest drivers of value on off-market or value-add opportunities.

It can be directionally helpful just to get a quick sense of where a property might sit, but I wouldn’t rely on it for decision-making. Your own comps and underwriting will almost always tell a much more accurate story.

It’s also worth remembering that Zillow itself tried to operationalize this through its iBuying program and lost a significant amount of money doing so. That’s a good reminder that even with a lot of data and modeling, real estate valuation still has a strong “on the ground” and judgment-based component.

Marcus Gore · Answer

@Stephen Quesinberry

Thanks again!

Marcus Gore · Answer

@Caleb Brown

This is super helpful — I think this is the part most people don’t realize.

It’s not just “use comps,” it’s how specific you have to get with them — timeframe, proximity, even things like highways or neighborhood boundaries.

That level of detail is what really separates a rough estimate from how deals are actually evaluated.

Caleb Brown · Answer

Exactly. I look tighter in the city like that. Suburbs are more sprawled out so it's looser

Do You Actually Trust Zestimate When Evaluating Deals?

Do You Actually Trust Zestimate When Evaluating Deals?

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