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When I talk with people about Zillow, the first question that usually comes up is the Zestimate.  How do you come up with this number?  Can it be changed?  How accurate is it?

Even though we’ve addressed questions about the Zestimate on our blog in the past, we are now pleased to offer a short video, explaining the Zestimate. Actually, we created two separate videos about the Zestimate – one geared for real estate pros and one for the general site user.

If you find this helpful, please forward this post and these videos to anyone who you think would benefit.  Or, this video can be a great subject to discuss at your next real estate meeting!

Video for real estate professionals:

Video for the general public:

[youtube]http://www.youtube.com/watch?v=uaeAgfay01o[/youtube]

About the Author

Sara Bonert is the Director of Broker Services for Zillow. She works with real estate agents and professionals around the country to help them leverage online marketing opportunities and social media, while also promoting ways real estate professionals can market themselves and their business on Zillow.

  • P J Smith

    My latest seller (short sale) said Zillow estimated her property at @$165K. County assessor just re-estimated at @$120K. My comps, based on very similar properties in 1-mile radius was $75K. You can see the problem/s . . .

  • http://www.homebuysblog.com Ted Mackel

    This is just like the difference between FAKOs and FICOs. Only MyFICO.com has real FICO scores. Offerings form places like Truecredit generate FAKOs. While the Truecredit score is completely unreliable for obtaining credit, it is a good snap shot and starting point to monitor your credit.

    Zestimates don’t scare me or frustrate me. I understand how they work, where they are beneficial and I know how to coach my clients on their use.

  • LaDawn Menkemeller, EXIT Realty Metro – Dallas

    Foremost, Zillow.com is a welcomed tool with many terrific user friendly features benefiting buyers, sellers and Realtors. I adore this website!!

    That being said, it concerns me that Zillow advertises, educates, informs consumers of the estimates with estimate ranges relating to property values stating publicly that these numbers are based on sales stats, tax rolls etc.

    Even if a consumer did not live in a non-disclosure state (like Texas, where I do business)… these available numbers are more often than not HIGHLY inflated caused by sales numbers including Realtor fees AND Seller contributions with no consideration to the specific market conditions (what’s around it and what’s in the same subdivision: new construction, new construction foreclosures, pre-existing home foreclosures, pre-existing homes competing with all this and builder styles etc).

    It’s a bad idea (if not entirely misleading) to put an “estimate” and an “estimate range” when it comes to VALUE without solid accurate information.

    I realize it’s to be considered a “tool” for consumers…and that where hiring a seasoned Realtor comes in play…but a “range of subdivision pricing” is perhaps a smarter (and definitely a less liable) way of doing business for zillow being that consistent, accurate information is not available and therefore not being used to determine appropriate value to the general public.

  • http://www.TheFirstKingTeam.com Niki King

    I understand you position; however, I am noticing that my sellers in Los Angeles who are trying to do loan mods with their lenders and are up against putting their home for short sale once the lender declines them, have high hopes that they will be accepted on their loan mods since they BELIEVE the values that zillo is stating as a fact and not the sales price that Realtors list the home as. I am happy you put this video up so I can show my sellers that although accuracy is always sought after, nothing compares than a local analysis and hard data such as solds and pendings…

  • http://cottagenorth.com Fern Dumas

    ZILLOW IS A ZESTIMATOR and that spells garbage in dollar sense.
    The Bank of America in certain areas decided to use Zillow rather than spend on qualified appraisers to qualify tentative borrowers. We have a property that was zillowed from $110,000 to $56,000 over a few months, we got turned down for $70,000 by Bank of America and the RBC who care not about Zillow loaned us $110,000. WE have the best of credit , but the point is we have the best of properties, on water access to The Gulf of Mexico
    New windows, appliances, fixtures, completely renovated with $40,000 dollars of upgrades and Zillow’s ball parks figures make it a joke in our neck of the woods . They have Zestimated a delapidated trailer that should be condemned , priced at $90,000. They have a forclosed home which is totaled inside and with county infractions pending and demolition pending because there was no building permit and in contrevention or county code compliance listed at $245,000 . In My neck of the woods ZILLOW IS OUT TO LUNCH/
    Zillow is providding a service that is detremental to good honest people. Dumb bankers poorly trained in
    real estate and stuck with surplus inventory are trying to cut corners and save money and trusting Zillow as their Real Estate Guru
    That is how I came to buy my second property , a Half million dollar home for $153,000 dollars. The certified appraiser confirmed that the lot alone with 270 feet waterfrontage going to the Gulf of Mexico , far exeeds the total purchase price.
    The world is full of succers just waiting to be suckered in ,use Zillow to buy but not to sell
    feel no remorse for the banks, just have compassion
    for the victims who have no real estate savy
    and trust what they see on their computers.
    Bail out money must have compensated for the $400,000
    dollar mortgage that was expunged when I became the new owner , SO ZILLOW THANKS AND NO THANKS , You ARE A DOUBLE EDGE SWORD
    FLICKRPRO

  • Alan Trugman

    As a professional realtor with a background in market research (former Vice President of Marketing and Sales for Experian Consumer Research), I have a unique vantage point regarding the “accuracy” of Zillows estimates. All research estimates are as acccurate as the data and model used to produce the projections. Zillow operates within a “black box,” meaning there is no transparency regarding the data or the algorithm used to produce the estimate. In the world of research, this is highly suspect and you would be laughed out of most research directors offices with no methodology to review how the estimates are produced. But you are marketing directly to consumers and realtors, making the calculation that no one really needs to know how the so called “Zestimate” is calculated. As you can see from the comments of homeowners and realtors, you are not pulling the wool over anyones eyes who has the capacity to question. You try to cover yourselves by stating the “zestimate is a starting point,” but how lame is that? Consumers, if you want an estimate of your home’s value, hire a professional appraisor WHO IS FAMILIAR WITH YOUR LOCAL MARKET, or work with a professional realtor with the background to produce a comparable market analysis (CMA) for you based on comparable Title Transfers, Under Contracts and Active listings. If anyone would like more information, feel free to contact me through my website at http://www.alantrugman.randrealty.com

    As always, Caveat Emptor!

  • P J Smith

    Amen, Alan Trugman! And ditto on hiring an appraiser who’s familiar with local neighborhoods and market conditions.

  • http://cottagenorth.com Fern Dumas

    I am quite pleased that Zillow did not infiltrate Canada Yet. However our banks work differently so I think Zillow will not have the impact it presently has in the USA.
    I placed a make me move ad on Zillow with an abdominable price, and Bank Of America declined a home equity loan to my spouse because the house was listed for sale, what they failed to recognize the home was not listed for sale and further more it is not

  • http://cottagenorth.com flickrpro

    I am quite pleased that Zillow did not infiltrate Canada Yet. However our banks work differently so I think Zillow will not have the impact it presently has in the USA.
    I placed a make me move ad on Zillow with an abdominable price, and Bank Of America declined a home equity loan to my spouse because the house was listed for sale, what they failed to recognize the home was not listed for sale and further more it is not registered to me.
    The point in matter, if I claim my home, will the county and tax appraiser schedule their inspections based on Zillow Data ?
    The Bank of America is guaging you through Zillows eyes and info , why would anyone not think that the counties and other corporate entities will not follow suite. It is no longer a case of buyer
    beware…it’s …big brother is watching you !
    I have observed Zillow for quite a while
    and enjoy surfing and checking out Zestimates but
    when Zillow becomes a real tangeable company impacting the real estate market, that is scary and serious and the reprecussions are monumental , both in the private sector and in the business world.
    Why not just hand over the USA to Donald Trump ?
    http://cottagenorth.com
    For Sale Without Zillow !

  • ingrid y

    i think zestimate is powerful in changing the business model and imposes friction between real estate professionals and the buyer and seller. zillow can choose to spin this in many different ways to put a positive spin, but to be honest, real estate IS SUBJECTIVE, and i think this is not a very good product for the industry or the people that operate in it. it sets unrealistic expectations or unnecessary doubts from the consumer (buyer and seller) and puts the real professionals in a defensive spot. Ultimately, it makes it a lot harder for the professional to do their job. btw, it should not be a STARTNG POINT either… lol.

  • H Jeanette

    I believe Zillow excels when providing factual data such as sold prices or current listing prices, however, because Zillow cannot walk into the house to see if it’s been updated from to bottom or will be a tear-down because the owner has neglected or injured it, the Zestimate is fatally flawed. I explain to my clients (I’m a RE Agent) that the Zestimate cannot preview homes as I do, does not talk with buyers as I do, doesn’t know where the outliers are as I do. I feel that in the end, Zillow invites itself to be discredited because agents need to refute the Zestimate with cold hard facts. I would encourage Zillow to keep what works and get rid of what doesn’t (the Zestimate).

  • http://www.tucsonretire.com Greg

    The bottom line is that it does not help the real estate professional do their job. I confuses the public, puts us on the defensive (defending our CMA), and has to potential to create immediate distrust between the agent and the client. “But Zillow says………….

  • marelin

    I love zillow.com. To all the people that complain that the zestimate is not accurate — I recommend that you look up the deffinition of estimate in the dictionary. It’s not called a zappraisial!
    That said, I understand why real estate professionals do NOT love zillow. They will no longer be paid $30,000 for a job that the internet can do better. (Putting a potential buyer of a home in contact with potential sellers of a home.)
    Don’t sell out to the real estate establishment. Long live the zestimate!

  • Bill Beteille

    Thank you very much for the video and accuracy chart.
    I have wondered for some time now whether this Zestimate would help or hurt the real estate sales business in general and mine in particular.
    I now think that it hurts in general and now after having the accuracy chart it may actually help mine in particular.
    It hurts in general because it caters to the public misconception that it doesn’t matter what real estate agent you get they are only there to handle the paperwork and don’t really know what homes are worth. It offers people this absolute authority called Zestimate to argue against the real estate agent’s opinion of value.
    It will help me to compete with my fellow real estate agents because I can get the customers they won’t because I have the tools and the know-how to combat the misconceptions perpetrated by the Zestimate. The accuracy chart is Zillow’s own admission that the Zestimate is likely bogus. It will help me to handle any objection to my determination of home values.

  • http://www.spadaro-usa.com John Spadaro

    Zillow is nothing but artifical intelligence. Your site does not update itself like a true analysis site should. If marketwatch.com used your formula for values you would have investors jumping off the Golden Gate Bridge. I argee with most of my fellow Realtors comments and the appraisers comments. If you want your site to be of any value to anyone, get it fixed.

    Oh, and one more thing, tell the banks that believe your values to call me. I have a bridge that links Brooklyn to Manhattan that I would like to sell them.

    Oh, maybe appraisers should get together and for a Zillow like website and prove what real values are.

    PS…. when will zillow put a disclaimer in bold letters that there information is based upon artifical intelligence and should not be used to justify the sales price of a home with out contacting a Realtor or an appraiser?????

  • Brian Eastman

    I just received an email this morning from a client stating that he was worried about what Zillow said a particular property was worth and thought it justified a low-ball offer that the seller would never accept in a million years. That is, IF he now even decides to submit one after being very high on the property during the showing and now soured by the info on Zillow. In my area, which is a medium sized city, people will typically pay a lot more to live on one side of a major thoroughfare than the other and there is a huge difference in the quality of the neighborhoods. In some areas, the difference between a “desirable” area and an “undesirable” area can be measured in a few city blocks.
    I had to respond with yet another long email explaining that these are not appraisals, not based on the complete picture of home sales, and that Zillow doesn’t differentiate between the “good” side and the “lousy” side of the street.
    For some reason, it seems as though people are more willing to place their trust in the opinion of a website 1000 miles removed from the local market than from the professional that works that market. I’m not sure you’re realizing how much faith home buyers and sellers are putting into the product. There definitely should be some kind of clear disclaimer directly below the zestimate. As for how much faith I put into it, it’s zero.

  • Pingback: Understanding The Zestimate (Video) « Heather in the Real (Estate) World

  • http://cottagenorth.com PURDY FERN

    ZILLOW is a very fun and enjoyable site to surf and Google Earth is also interesting.These Internet tools
    are rather neat technological inovations for internet users.

    The catastrophy comes into play when Zillow takes on the position of a KNOW IT ALL REAL ESTATE authority whith Zestimates that cross over into ESTIMARES and the appraisals and real property market values.
    What is making this happen is bankers, realtors,sellers and buyers,internet surfers…
    It will uplift some and devestate others and this will go on until ZILLOW is shown for what it really is and it is a farce in the real property appraised values based on accurate knowledge and facts that are much more complex than zillow’s ball park approach, shot in the dark from cyber space.
    i explained this to one dumb banker, you can do the same unzillowfy your business reps etc…etc…

  • Alex Beck

    The Zestimate if totally inaccurate. My house and my neighbors house are INDENTICAL and they have a difference in price of $100,000. And when I say identical I mean identical. Our homes are assessed almost exactly the same and our taxes are very close as well. So there is no reason for this difference. AT one time there was only a small difference but something changed. So I wrote them and they did not respond. So I know for a fact they are inaccurate.

  • http://cottagenorth.com flickrpro

    Zillow
    join my group The BIg ZERO
    It is group z at flickr
    http://flickr.com/groups/z
    You are much more into photography than Real Estate
    We have so much in common !
    Z , ZILLOW ,ZERO…
    Zestimates and photography do not require a license
    you will feel right at home , we have no rules

  • Pingback: Zillow’s Home Valuation “Zestimate” « Naperville Real Estate Video Blog

  • http://zillow T. Pastor

    We live in the “estate” section of our neighborhood for which we paid a premium yet your zestimates value homes that are on the main thoroughfare of this community higher than ours. What’s the deal?

  • http://pgiwaterfront.com/ flickrpro

    Zillow is the worst thing on the Internet for the Sellers and Buyers and Banks. It is a detriment to real estate in America. And if a class action ensued I would find it appropriate. We were refused a home equity loan from Bank of America because of Zillow.
    Here is a small overview of what Zillow lacks:
    5610 0akview Punta Gorda Florida-33950 $252K
    now on market for $65k and no takers yet-County infraction ordinances to the tune of $20k,the house is trashed needs new roof..etc
    Zillow was a fun thing, now it is causing serious trouble for people in a bad economy and already hurting.Zillow should be held acountable for its cahotic intrusion into Real Estate.
    This is not sour grapes on my part,my properties are on water and Zillow will not impact what I want to do.
    Zillow is only Zestimates but Zillow is more and more aggressive online and they crossed the fine lines which require professional training, appraisal skills, licensing. Zillow is seaking to have people participate on their website,with make me move and such things . I think zillow belongs in the second life virtual world http://secondlife.com/
    Please get out of my neighbourhood as viewed from Google
    What Am I doing here ?
    It is the Real Estate Boards and consumers advocates who should be posting here.
    remember Zillow , park it here= http://secondlife.com/

  • marelin

    I’ve just paid $530 for an “official appraisal” that is much further off than zillows “zestimate.”
    For $530 my premium house was comped against two houses that were so trashed inside that they were CASH ONLY sales, as no lender would touch them at any price. The third “comp” was against a house that went very cheaply at a real estate auction held 75 miles away in a different county.
    I wish BofA did use zillow, where the value of this house is much more acurate.
    You would think that perhaps there were no “normal” transaction to use for comps, but that is not the case. Two weeks ago, less than 200 feet away, a similar house on a smaller lot sold for $135K, yet because of the very poor choices made by an incompetent appraiser I have an “official appraisal” of $85K. (Zillow.com at $121K is at least in the ballpark.)
    Now my buyer will not be able to get the FHA loan he should be able to get.

    My previous post: I love zillow.com.
    To all the people that complain that the zestimate is not accurate — I recommend that you look up the deffinition of estimate in the dictionary. It’s not called a zappraisial!
    That said, I understand why real estate professionals do NOT love zillow. They will no longer be paid $30,000 for a job that the internet can do better. (Putting a potential buyer of a home in contact with potential sellers of a home.)
    Don’t sell out to the real estate establishment. Long live the zestimate!

  • http://www.markjacobsrealtor.com Mark Jacobs

    Dave- You are right that this would be great information and you are right that it isn’t easily done.

  • http://www.3kmobile.com LucyMobile

    I took me ages to find all this info, thanks for it.

  • http://accessavhomes.com/ Palmdale homes

    I agree with Sara from Zillow. The Zestimate is an awesome tool for getting a general idea of what your house might sell for. However, Zillow does not have a representative agent visiting each house, nor have they drive down the neighboring streets to see what other houses look like. There are many variables to consider: Are they all tract homes, or a little more unique in shape, square footage, lot size, etc. It’s better to have a trained pair of eyes with access to the multiple listing service to get a good selling price for your home.

  • http://www.zillow.com sara bonert

    Palmdale Homes – You bet that a trained pair of eyes is very likely to be more accurate than a computer!

    Since this video is over a year old, I wanted to mention one cool updated we’ve recently done.

    Now on a posting of a For Sale home, the listing agent or the homeowner (only these two people) can log on and Comment on the Zestimate. They can say whether they think the Zestimate is too low, high or just right and why. This comment can then be publically published to the property page.

  • http://www.markjacobsrealtor.com Mark Jacobs

    Great Information

  • mark

    what i find most odd about the zestimate is that it doesn’t seem to take much into account other than our sales price. we purchased a home in february of this year for $175k (it was a foreclosure). our professional appraisal before significant repairs was $205k and we’ve dumped about $30k into updating the home (siding, garage door, wood floors, etc…) and yet that zestimate dropped from $238k before we purchased the home to *drum roll please* $175k (-26%). the depreciation is far worse than our zip code and i’m beginning to think you based it on nothing except for our sales price which was arbitrary to begin with. the home, even in this market, is easily worth $225k. it just seems nonsensical to indicate there’s some “formula” for calculating the zestimate, when it really came down to sales price in this case.

  • http://www.markjacobsrealtor.com Mark Jacobs

    Most agent just wont get it.

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