Zillow Lost $881M on Bad Estimates... Should You Trust Yours?

Let’s talk about the Zestimate. You know, that magical number Zillow gives your house that seems to change every other week? One day your home is worth a fortune, the next, not so much. What’s up with that?

Why Is the Zestimate So… Inconsistent?

🤖 It’s Just an Algorithm. Their algorithm has never stepped foot in your home. It doesn’t know about your recent kitchen remodel, your killer view, or the fact that your neighbor’s house (which sold for way less) had a leaky roof and shag carpet from the ‘70s. A computer can only do so much when it’s missing key details like upgrades, layout, and overall condition. 

📊 It Uses Old (or Just Wrong) Data. Zillow pulls info from public records, which aren’t always up to date. If you added a new bedroom last year but the county hasn’t updated their files, guess what? Zillow has no idea. Sometimes, their data is just flat-out wrong—like miscalculating square footage or missing recent sales that would give a more accurate price range. 

🏡 It Compares Homes That Shouldn’t Be Compared. Zillow pulls info from public records, which aren’t always up to date. If you added a new bedroom last year but the county hasn’t updated their files, guess what? Zillow has no idea. Sometimes, their data is just flat-out wrong—like miscalculating square footage or missing recent sales that would give a more accurate price range. 

💸 Even Zillow Doesn’t Trust It.
A couple of years ago, Zillow tried flipping homes using their Zestimate data… and lost $881 million. 😬 They literally had to shut the whole thing down because their pricing model was so unreliable. If their own company couldn’t make profitable decisions using Zestimates, that’s a sign they’re not exactly a gold standard for accuracy.

So…Should You Ignore the Zestimate?

Not necessarily. It’s a fun tool to get a very rough idea, but it’s definitely not something to base big financial decisions on. If you ever want a clearer picture of what your home is actually worth, the best way is to look at real-time local market data, recent comparable sales, and, well… talk to a human.

P.S. I just completed a report for a client, and their Zestimate was off by $30,000! Can I create one for your home? (it’s free).

Just click on this post to send me an email!