The Accuracy of Zillow

The Accuracy of Zillow

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A real estate professional is often asked: Just how accurate is Zillow? If I had a nickel for every time a homeowner has mentioned Zillow when doing an appraisal … I’d have a ton of coins! Zillow can serve a useful purpose in any real estate market. In some markets maybe it can be a reliable indicator of what market value might be and in more complex markets perhaps its starting point or a reference point. I though it would be a great idea to dive into the accuracy of Zillow and its Zestimate for Nevada County. I’ve asked some of my local appraiser friends to look up some of their recent appraisals to compare an unbiased human appraisers results, to an automated Zestimate.


What is a Zestimate?

The Zestimate® home value is Zillow's estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home's value and is not an official appraisal. The Zestimate is automatically computed daily based on millions of public and user-submitted data points.

Is the Zestimate an Appraisal?

No. The Zestimate is not an appraisal and you won't be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.

Zillows Accuracy

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The Zestimate’s accuracy depends on location and availability of data in an area. Some counties have deeply detailed information on homes such as number of bedrooms, bathrooms and square footage and others do not. The more data available, the more accurate the Zestimate value.

Zillow's accuracy has a median error rate of 5%. This means half of the home values in the area are closer than the error percentage. For example, in Seattle, Zestimate values for half of the homes are within 5% of the selling price, and half are off by more than 5%.

Brian’s Test

I studied 30 recent appraisals completed by myself and other local licensed real estate appraisers. For confidentiality reasons I did not know the properties or details of the homes, I was studying the appraiser's results vs. the Zestimate.


Of the 30 recent appraisals, 47% of the Zestimates were higher than the appraised value. The range was 1% to 72% higher than the estimated market value. On average, the Zestimate was 20% higher than the appraised value (when the Zestimate was high).

The Zestimate was lower than the appraised value 53% of the time. The range was 1% to 57% lower than the estimated market value. On average, the Zestimate was 11.6% lower than the appraisal (when the Zestimate was low).

Altogether the average difference between the appraised value and the Zestimate was +/-15.5%. What does that mean? If the Zestimate of a home is $500,000, on average the market value is between $422,500 and $577,500.

What the heck Zillow?

Nevada County is an extremely difficult market to assess market value accurately. Zillow or any mathematical formulas, which are typically based on public records data, are always going to struggle in non-conforming areas. This is because of the wide range of qualitative features of a home. My home is a perfect example, the house next door is far inferior quality (and I’m guessing condition by the tarp on the roof) but the home directly across the street is far superior. Zillow is always going to struggle in markets like these where it cannot assess anything outside physical attributes.

Zillow has a much higher accuracy rate in markets where homes are much more similar. Parts of Roseville, CA would be a great example. Tract home subdivisions where most of the houses were constructed with overall similar quality and are in overall pretty similar condition lead to a much more accurate Zestimate. The only major differences are lot size, square footage, number of bedrooms and bathrooms, etc. Notice all of these things are actual numbers, which a mathematical formula can solve for.

What We’ve Learned

Zillow can be a starting point …. sometimes. I asked the appraisers about the homes where the Zestimate was over 30% off from the appraiser's results. The common theme was that this was a very complex property. All of them were either lakefront, large acreage, Victorian style, Fair/Poor quality, etc. For these types of homes in Nevada County, the Zestimate most likely won’t be accurate. Even for non-complex homes, Zillow may be just a starting point, let's say within +/-15%. If you really want to know the value of a home, you are going to have to hire a local, knowledgeable professional.

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