According to Zillow, “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.” (Italics ours)
A key point to understand here is that the appraisal is NOT official, but how accurate or close to accurate is it?
As recently as July 2018, Zillow stated that 85% of the home Zestimates were within 20% of the actual sales price in the New York region. Meaning, if a house is listed at $300,000, there is a potential that the sale price could be as high as $360,000 or as low as $240,000; Quite a drastic difference.
Probably the most direct position comes from the Washington Post stating “No algorithm, however sophisticated, can quantify the value of a kitchen that was remodeled just before a home was put on the market or a yard that is poorly maintained. It simply isn’t possible for any AVM to predict the value of a home with a level of accuracy sufficient to make a housing decision.” Even Zillow admits that valuations can be way off depending on the information they have “As mentioned previously, the Zestimate is a starting point in figuring out the true value of a house. The amount of data we have for the house affects the Zestimate accuracy. If your home facts are incorrect or missing, you can update your facts, which may affect your Zestimate value.”
An article published by Forbes, suggests plugging in your own address into Zillow, Realtor.com, Redfin, and Trulia to see that each “appraisal” is different. These touted market values seem to be doing homeowners an enormous detriment and even inspired one desperate home seller to sue Zillow over their inaccurate validation. Barbara Andersen of Glenview, Illinois, took the popular real estate site to court seeking an injunction due to Zillow propagating themselves as appraisers and undervaluing her home by slightly over $60,000 due to their inaccurate algorithm. Her townhouse was listed $100,000 less than the townhouses that sold just across the street which did not warrant the low Zestimate value.