A Breakdown of Zillow’s Zestimate Tool


It’s more alarming to observe a drop or decrease in your Zestimate during a time when market conditions are hot, houses are selling fast and inflation is pushing homes’ values to the sky (pun meant).

If you use Zillow’s Zestimate tool to determine the value of your house You might be disappointed that the Zestimate is too low. It is possible that you’ve information from a different source, such as an appraisal that claims your house is worth higher.

The Zestimate is an effective tool to estimate the value of your home, without having to speak with an agent in real estate or pay the expensive cost of an appraiser. You should definitely check your Zestimate and look at it against your neighbors.

Let’s explore why your Zestimate is low. It begins by knowing the Zillow Zestimate tool.

My Personal Experience With Zestimate

I’ll get into the details of the Zestimate however, first I’d like to share my own experience to provide you with some ideas I’m planning to present.

We want to remind you it’s a widespread issue. This isn’t just you or some homeowners who receive incorrect and low estimates.

I moved to my state Michigan at the age of 2021. I bought a house right before the huge inflation. The house I purchased was an inherited house that had just been cleared of probate. It was old and in need of updating.

I bought the house for 5.5 percent less than the market value. After closing the Zestimate indicated the closing cost on my property, even having an appraisal that stated my home was worth substantially higher.

As a real estate agent licensed I continue to check out my Zillow account after I have completed an analysis of the home’s value on my house. It’s been a little over six months since I sold my house.

In the past year, the Zestimate has risen by 6 percent. But, I would put the value of my home at about 25% more than when I purchased it.

The reason for this is the rise in home prices due to inflation and I have made repairs and updated.

Why is there a huge divergence? The first reason is that Zillow does not know my property appraised higher than what it was sold for. In addition, Zillow isn’t aware that I did some improvements to my home that increased the value of my home.

That’s the biggest issue.

Issues with data.

Zillow does not have the information.

Take note of this home which doesn’t have a bedroom.

As we move forward as we go on, remember this basic idea in mind an automated value model algorithm is only as reliable as the rules and information that it is given.

The old adage says, “garbage in. Garbage out.”

Zillow’s Data Is Missing Or Wrong

When you use any automated value model such as the Zestimate the accuracy of data is a crucial aspect. Inaccurate data can cause many issues when using the Zestimate.

One of the most frequent causes of inaccurate data is the decay of data. Gartner says that each month, around three percent of the data has degraded across the globe.

Although this is the case for any data, it’s sensible to extrapolate and suppose that Zillow’s data decays by 3% each month.

If there aren’t any additional data points added, such as when a house is listed, greater decay is likely to occur. It’s sensible to say that the more time a house is owned the more likely Zestimate is not accurate.

Keep Calm and Shop On

It is yet to be determined whether a new algorithm will be offered in the Zillow public contest, or whether Zillow will adopt any changes in outcomes from entries to contests. However, in the meantime, it is important to keep in mind that even the slightest 4.3 percentage difference can amount to millions of dollars in the local real estate market.

If you’re interested, make sure to go through the Zestimate when you are looking for a home. But when it comes time to make an offer make sure that our agents’ knowledge of the local market and expertise work to your advantage. You’re after all hoping to save money on the perfect toilet.

If you’d like to know more information on the real value of the home that you are considering Our experts at Beverly-Hanks are available to assist. Contact us now to speak to an agent from Beverly-Hanks about purchasing homes and land in Western North Carolina.

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