Los Altos Real Estate Blog


Just how wrong is Zillow and what do you tell your clients?

With Free Data, You Get What You Pay For
We all have clients who go to Zillow, CyberHomes and other sites to get an estimate of the value of their home.  An article in the Sacramento Bee a couple of weeks ago talked about how far off these sites can be.  Even Zillow's chief economist says they are accurate to within 10% on their best day.  Since it's free to consumers, do these sites do more damage than good.  Is the free data offered without the expertise of an agent setting expectations higher or lower than they should be?  The value of Zillow and other automated estimating sites is just as they present themselves, a starting point.  Where they fall short is in areas where the homes become more distinctive.

It's Just A Step Along The Way
A lot of agents, myself included, feel that in some markets these estimates are so far off the mark as to be at least useless and at most dangerous.  Sellers could feel their home is undervalued and decide not to sell.  Buyers could get unrealistic expectations on value and press agents to make offers based on those estimates.  However, I seldom see these things happen.  What is most often the case is that buyers and sellers get an idea of the relative value of the home to others in the area.  In general, these estimates are a starting point from which they and their agents can start.

A Local Realtor Is Better
These automated tools will never replace an expert in the area.  A Realtor will be able to account for variables the software can't.  In the process, the Realtor can educate the seller or buyer about the market and set a price that makes sense.

In the local market of Los Altos and Los Altos Hills, Zillow is often very wrong.  A few times it has been very accurate, but 9 times out of ten it's way off.  It's often wrong because an entry-level rancher with 1800 square feet can appear on Zillow to be worth $1.2 million because it hasn't been fixed up.  However, with some updates it may be worth as much as $1.5 million.  The 25% discrepancy is huge and requires a Realtor to discuss and explain.  There's a piece of property on Loyola Drive in Los Altos that Zillow shows as worth $902K.  It has a 672 s.f. house and a 20,000 s.f. lot so it's really worth at least $1.2M - based on my expertise.

This problem is even more pronounced in Los Altos Hills.  It's easy to find examples of valuations where updated homes with $3-5 million are given estimated values of $2-3 million.  Just remember to check with your local Realtor to get the most accurate estimate of the value of your home.

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 Bryan Robertson, CEO | T: 650.799.9951 | Email: bryan@catarra-re.com | Website: http://www.BryanRobertsonHomes.com |CA BRE# 01191946 | Catarra Real Estate, Inc  | 171 Main St #220 | Los Altos, CA 94022



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Comment balloon 9 commentsBryan Robertson • August 27 2010 05:00PM


I noticed that they also use refi-s in their mix.  I found this out when I ran one a few years ago as a test for a neighbor, just to compare it to my CMA.  My home came up as a comp!  I had refinanced and they used that figure.

Posted by Kristen Wheatley, Supporting Success - Best Job in the World! (Better Homes & Gardens | The Masiello Group) over 8 years ago

Bryan -

I try to have fun with the zillow estimates. When I do a CMA and have my final comps, I often check the sold ones with the zestimate and I often find homes that sold 30 days ago for 250k have a zestimate of 290k. So this means zillow feels the house went up 40k in value in 30 days in the worst R.E. market since the great depression. Also, if the zestimate is way off what I've shown them, I ask "Why did zillow price the home there?" What do they base it on? Here's the data an appraiser will use.

Posted by Dan Falco, Assist 2 Sell Full Service Discount Broker (Assist-2-Sell Buyers and Sellers Advantage) over 8 years ago

Kristen - I didn't know they did that but it seems to fit the profile of a lot of automated sites.  I found out that Realty Trac uses multiple foreclosure events on the same house in their stats so it'll make one house look like 3-4 foreclosures.  Bizarre!


Dan - Yeah, Zillow really needs to tweak their formula if they want people to respect their estimates.  Looks like an opportunity for someone creative to start a new company :)

Posted by Bryan Robertson over 8 years ago


Excellent post.  We constantly hear of Zillow's wrong assessments as well as dated to the time of purchase, it is good to get the word out.  All the best.

Posted by Ron and Alexandra Seigel, Luxury Real Estate Branding, Marketing & Strategy (Napa Consultants) over 8 years ago

Ron & Alexandra - Thanks!  I'm always looking for ways to get the word out here and elsewhere.

Posted by Bryan Robertson over 8 years ago

Brian, excellent and concise posting.  None of the free automated valuation models purports to aim to replace an expert agent's local knowledge.  Very few parameters are used in the selection of comparables, and as 2001 A Space Odyssey indicated, human decisions should be made by humans not by machines.  I often benchmark AVM's against Just Sold data, and there is often a wide variance.   

Posted by George over 8 years ago

George - Thanks!  The more awareness we raise concerning the validity of AVMs we'll either see more people calling or the sites will improve their equations.

Posted by Bryan Robertson over 8 years ago

Well said, you get what you pay for and Zillow is in business for ads and traffic, the zestimate was one for the top 5 worst ideas ever in real estate! 

Posted by Jeff Fisher, RE/MAX Fine Properties (RE/MAX Fine Properties) over 4 years ago

Brian I have put together one of the most detailed posts you will find about how accurate the Zillow home estimate happens to be. I swear Zillow doesn't care if their home values are accurate or not. It's all about keeping their name in the spotlight. There is a new article bashing Zillow almost everyweek. If they were concerned at all the would have removed this terrible feature by now.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 4 years ago

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