5 Things Zillow Won’t Do To Get Your Zestimate

zestimatePulling The Curtain Back On The Zestimate

For some reason the zestimate provided by Zillow has become the authority on value to many consumers. As an appraiser I get asked many times how close my appraisal will be to THE zestimate value. Real estate agents have also told me that owners expect to be able to sell their home for THE zestimate value. This has become such a topic of conversation and one that is misunderstood that I’ve written about it on numerous occasions so as to shed light on what the zestimate is and what it is not. Today I thought I would share with you 5 things Zillow won’t do to get your zestimate.

The Difference Between a Zestimate And An Appraisal

Lets take a look at how the zestimate differs from a real appraisal by studying what Zillow doesn’t do to calculate your zestimate.

Zillow Workers Do Not Walk Through Your House- Representatives from Zillow do not personally walk through your house to observe its quality and condition first hand. This is a very important point because without having first hand knowledge on the quality and condition of a home it is difficult, if next to impossible, to estimate a value. You might be able to give a very rough value estimate range, which of course is what Zillow does, but when you have a value range with a difference of $50,000 to $100,000 what good is that?

Zillow Workers Do Not Consider That Your House Is Unique Construction- In Zillow’s eyes your home is no better quality than the next house. It doesn’t matter if you have exotic wood or marble finishes or if you have custom built kitchen cabinets. An appraiser who walks through your home will rate your home on a scale from Q1 to Q5 (Q stands for quality of course) in order to determine a precise level of quality in order to compare it more accurately with the comparable sales that are used in the report. Adjustments are made based on the differences in quality level so if the appraiser had to use a sale that was not quite as nice as yours an adjustments can be made for this or it can be reconciled in the final value estimate.

Zillow Workers Do Not Verify The Square Footage Of Your Home- This is the biggest insult of all when you consider the fact that value is estimated by multiplying the homes square footage by the price per square foot. If Zillow doesn’t have accurate square footage on your home how can they give you an accurate value? They can’t. When you get an appraisal from an appraiser who visits your home they will measure your home to calculate the accurate square footage, including the basement. The sources that Zillow uses to get their square footage may not show any finished area in the basement, which can be a significant part of the value of the home.

Zillow Workers Do Not Verify That Sales Are Truly Comparable- When you hire an appraiser to perform an appraisal on your home they will sift through all of the sales data to make sure the sales used in the appraisal are comparable. I wrote an article once where I explained the difference between a sale and a comparable. There is a BIG difference between the two and if you use sales that are not comparable then your appraisal value will not be accurate. Zillow can not and does not go through all sales to pick the most similar ones because, after all, they don’t know what your house is really like on the inside because they have not walked through it. The best they can do is look at a large number of sales (which may not be comparable) and somehow come up with a price per square foot to multiply by your square footage, which may be inaccurate. Can you see a trend in inaccuracies here?

Zillow Workers Will Not Look At Pending Sales And Listings, Etc.- We all know that appraisers consider recently sold homes when choosing comparables but did you know we also analyze active and pending sales? Closed sales measure what happened in the past but pending sales and active listings can gives us insight into what is happening right now. It is my personal opinion that a pending sale that has gone through all the necessary steps before closing, but has not closed yet, is the most accurate indicator of value because it measures buyer and seller behavior at the present time, not in the past. Active listings can also give us insight because the list price typically reflects the upper limit of value. Reconciling above the list price of other similar properties would not be wise because it would not be reasonable to assume a typical buyer would pay more for one home over another if they are approximately equal. This is something sellers should consider

So now you know the difference between a zestimate and an appraisal by a local licensed professional appraiser. There really is no comparison when you look at them side by side. Let me know your thoughts or any questions you have. How does your zestimate compare with a recent appraisal you got?

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  1. The other problem is that Zillow will add sometimes add finished basements into the total living area and give it the same weight as the above-ground living space. The skews the algorithm and takes away from your above ground price per foot (because their sale shows a lower per s.f. price, but Zillow doesn’t know why). Happens in my neighborhood about 30% of the time.

  2. Leigh Ann Parkinson says

    Valid points, Tom. Thanks for the article. Wish I could upload something I just put together regarding a Zestimate. If you’re interested I’ll email it to you. Thanks.

  3. CityStumbler says

    Tom– excellent analysis. Values change from home to home in high density areas and from block to block in suburban ones. Yet, AVMs aggregate data from “rings”, for example, a 1 mile radius around your home, which often includes areas of greater or lesser desirability. As a result, home values are skewed. Baseless comparisons are never fun to work with, are they?

  4. Well said, Tom. Consumers ought to tune in to your points.

  5. John Tsiaousis says

    Good points, I’ll add another into the mix, location. I just performed an appraisal in Chicago and the property was on the border of 2 different neighboring communities. They had received a zestimate which was pulling data from both neighborhoods. The problem with that is, properties in the subject’s neighborhood were selling for $100K less and there is a clear location factor that must be considered.

    • Great point John. We have areas like that here in Birmingham, AL too. One of the most expensive cities in the state, Mountain Brook, has areas adjacent to it that have nice homes but nothing near the value that Mountain Brook brings. I know the problem you describe is probably occurring in this area as well. Once again this is something a local professional would know but not the AVM’s that Zillow uses. Thanks for the adding your insight.

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