Zillow is Lying To You And It's Costing You Thousands
That Zestimate you see for your home's value on Zillow? It’s completely wrong, and it’s costing you serious money—we’re talking $50,000, $70,000, or even $100,000 off your true price.
The truth is simple: the Zestimate is a flawed Automated Valuation Model (AVM) engineered to benefit Zillow, not you. Professionals know that the moment a home is listed, the Zestimate often immediately undercuts the price, manipulating the market and deceiving consumers.
What is a Zestimate, Really?
The Zestimate is emphatically not an appraisal, and it’s barely even a decent guess. Zillow has never seen the homes it values.
The figure is primarily a marketing tool designed to get you to contact Zillow so they can connect you with one of their premier agents. Don't be fooled—the Zestimate is the bait, especially when Zillow itself warns that the figure could be off by up to 20%.
Garbage In, Garbage Out (Ignoring Your Upgrades)
Zillow’s algorithm relies on flawed information. It operates under two massive limitations:
- Reliance on Public Records: Their data is pulled from public records, which are notoriously slow to update and often contain errors.
- Zero Knowledge of Condition: Zillow knows absolutely nothing about a home's condition or the blood, sweat, and money invested by the homeowner. They don't know about a new kitchen, an updated roof, a custom pool, or an entertainer's backyard. The AVM assumes every house is identical to the neglected foreclosure down the street that sold for pennies on the dollar. They take none of a home’s upgrades into account.
It Can't Read the Market Momentum
Zillow relies solely on historical sales data—past sales that have already happened. It fails spectacularly at understanding current market momentum:
- Lags Behind Reality: It doesn't look at what buyers are paying above or below list price in any neighborhood today. Its algorithm doesn't understand market momentum and is notoriously slow to catch on when prices are going up or down.
- No Nuance: The algorithm can't distinguish between a foreclosure, a short sale, a family transfer, or a standard resale home. It lumps all sales into the same basket, leading to massive inaccuracies.
The Real Cost of Zillow's Flawed Data
This faulty information impacts everyone in the transaction:
- For Sellers: A low Zestimate immediately undercuts the asking price. Buyers will use Zillow’s bad information to undervalue the home, creating friction in negotiations.
- For Buyers: If Zillow overprices a home, buyers run the risk of having to compete at a higher price than true market value because everyone believes the Zestimate.
- For Homeowners: If a homeowner plans to refinance (refi) or get a HELOC, and their Zestimate is drastically different from the bank’s official appraisal, it can create major problems and delays in financial plans.
The proof that Zillow's numbers are flawed is in their own history: Zillow Offers, their iBuying program, lost over half a billion dollars buying homes based on their own AVM. If they couldn't make their Zestimate work in the real world of purchasing, consumers should be wary of trusting it with their largest asset.
Bottom Line
If you want a good, realistic idea of what your home is worth, stop looking at Zillow.
One quick, simple check you can do is to look up homes within a one-mile radius—or better yet, homes on your exact street—that are similar to yours and have sold within the last three to six months. This provides a more realistic estimate than relying on a machine.
You can call or text me today for an absolutely free, no-cost, no-obligation market analysis on your home. I'll provide you with real market data so you can make informed decisions about selling, buying, or refinancing.