Zillow - Critique of Zestimate Accuracy

Critique of Zestimate Accuracy

In 2007, The Wall Street Journal studied the accuracy of Zillow's estimates and found that they "often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible."

According to Fortune, "Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered 'accurate'—by its definition, within 10 percent of the actual selling price. And even that accuracy isn't equally distributed." Fortune cites the state of Louisiana as an example, where "the site is just about worthless".

In October 2006, the National Community Reinvestment Coalition filed a complaint with the Federal Trade Commission stating that Zillow was "intentionally misleading consumers and real-estate professionals to rely upon the accuracy of its valuation services despite the full knowledge of the company officials that their valuation Automated Valuation Model (AVM) mechanism is highly inaccurate and misleading." In a letter dated May 4, 2007, the FTC elected not to investigate this complaint, which was later withdrawn by the NCRC.

Real estate brokers state the site does not give an accurate reflection and that other factors must be taken into consideration in buying or selling a home. Real estate agents with specific market knowledge are more likely to know specific factors affecting the sale of a home such as the overall condition of the home, room flow, landscaping, views, traffic noise, and privacy. These factors have been called unzillowables, a term coined in the real estate blogosphere.

Zillow may use the last bank, assessment or sales transaction for home value. Some of this data is very 'old' (over twenty years) and so even home descriptions may be inaccurate (i.e., change in size/structure). This may mislead buyers (who may feel asking prices are way out of range when compared to the 'Zillow price') and work against sellers (because Zillow lists homes as worth far less than the current 'value'--based on Bank/tax assessments and recent sales.)