Here’s What’s Wrong about Zestimate’s Accuracy on Zillow
Ever checked your home’s Zestimate and thought, ‘Wow, I’m rich!’ …only to refresh the page and suddenly you’re $40K poorer? Same, friend. SAME. Today I’m spilling the truth about my personal ups and downs with Zestimate and how it can help or hurt you depending on how you use it. Have you ever been shocked by your home’s Zestimate? Did it seem way off?
Let’s talk about the Zestimate. What is it really? A Zestimate is Zillow’s estimate of a home’s value based on an algorithm that pulls from public records, past sales, and market trends. Sounds like an easy way to get an idea of value, right? But here’s the catch, it doesn’t take into consideration, your upgrades or remodeling and improvements since you purchased. It doesn’t know the floorplan layout and flow or how well the home shows. It may not take into account nearby sales that are in different types of neighborhoods such as age restricted or guard gated vs non guard gated.
Also, it may not take into consideration recent market shifts and changes. Our Las Vegas market can change quickly. I have seen one month in which we were getting multiple offers and the next month we are not even getting showings. In real estate it takes SEVERAL months for a recent change or trend to be reported statistically. When we see a slowdown then the home sits on the market longer and days on the market grow. By the time the home finally sells many months later and closes at a lower price then we see the average price go down but that is months later. When values are increasing and we have strong demand I often find the Zestimate is right on or even a little low. When values are declining and prices are reducing the Zestimate can be too high!
It’s kind of like that friend who means well but always exaggerates a little. It gives you a ballpark idea, but when you really want to know what a home is worth, it’s best to talk to someone who’s seen the inside, knows the neighborhood, and understands the market—like your local Realtor!
Here is when I hate the Zestimate. When I have a listing appointment and I see the value is much higher than I am going to recommend. I have a client in escrow right now. Her Zestimate was $611,300. There was a model match home that was in escrow for $550,000. That home started at $600,000 and continued to reduce until it got to $550,000 and finally had an accepted offer. I recommended listing between $590,000 – $550,000. Of course, she wanted to list at $610,000 so we did settle on $589,000. This slowed down the process and it took several weeks before we got a showing. It was hard to set realistic expectations when the seller already had in mind the Zillow figure. Of course, the moment we listed the home the Zestimate went down to $581,800 – almost a $30,000 reduction in one day! Often when Sellers see the Zestimate they want to try the higher price. I always hear, let’s start high and leave room for negotiations. If values are increasing this can work in your benefit – you start high and reduce as values go up and you meet in the middle – time is on your side. When values are declining and if you price too high and then reduce but now so has everyone else and the prices have gone down. You are chasing the market have to continue reducing. Statistically you will reduce 2 more times and ultimately end up selling for less than if you priced right from the beginning.
Now the “Love” Side of Zestimate
Storytime #2: I had a buyer using the Zestimates to narrow down areas by price range and made their search more focused. They had an idea of values and the market before we got together. Once we met, I set up a more specific and timely search directly from our MLS with the home criteria they were looking for. This way both the buyer and I were notified immediately when a new home came on the market that fit their needs! The zestimate is great for getting a ballpark value or starting conversation. I love looking at the zestimates when I am on vacation in different areas. I am not serious or truly looking to buy so it is great for a general idea of the market.
Rather than relying on the Zestimate here is what I Recommend Instead. I like to say I am in the trenches! I see market shifts and trends early! I make it my priority to study what is happening in our local Las Vegas market. Currently we are seeing the high-end homes sell but lower prices sit a little bit longer. You want to know what is happening hyperlocal to your home. The Vegas market, your price range and neighborhood! I ran a full market analysis. That includes recent comparable sales, market conditions, buyer demand, and even appraisal expectations. When I run the market analysis I look at the recent sales but also take into consideration the available inventory. The available inventory is so much more important than the recent sold to show what is truly happening in the market currently. If there are a lot of other properties sitting on the market then we have higher supply and my price recommendation is usually going to be to list lower than other similar properties that are sitting on the market. We are currently seeing properties sit a little longer.
Zestimate is like guessing someone’s age from across the street. Close? Maybe. Accurate? Not likely.
So, here’s the bottom line, as a Seller don’t base your listing price solely on a Zestimate It’s a helpful tool, but it’s not the full picture. Talk to your agent (hopefully that is me!) and let’s walk through the differences together so you can sell home priced smartly. It’s always good to keep an eye on trends, but the best decisions come from using multiple data sources and a little expert guidance never hurts!
For buyers, a Zestimate is a fun starting point, but verify with comps and boots-on-ground expertise. I not sure why I like use military metaphors but I am in the trenches and I do have boots-on the ground! There’s just no substitute for actually being out there and seeing things firsthand. That’s how you get the real story behind the numbers.
So yes—I love Zestimate for giving us a starting point but hate how often it gets taken as gospel. The key is knowing when to trust it—and when to call your favorite Realtor instead.
If you’re curious what your home’s real value is here in Las Vegas, reach out—I’d love to give you a custom analysis!
