Why Zillow's Zestimates Shouldn't be the Final Word on a Property's Value

Zillow's "Zestimates" are an estimate of a property's value, based on public data and proprietary algorithms. However, these estimates have been known to be inaccurate and it's important for buyers and sellers to understand their limitations.

1. Lack of local market knowledge: Zestimates are based on public data and algorithms, which can't take into account the nuances of a local real estate market. A local real estate agent with knowledge of the area will have a better understanding of the market trends and can give a more accurate estimate of a property's value.

2. Limited data: Zestimates rely on data that is publicly available and may not take into account important information such as recent renovations, unique features of the property, or market conditions that are not reflected in public records.

3. Error Margin: Zillow acknowledges that the Zestimate has a median error rate of 5% for on-market homes, which means that half the time the estimate is off by 5% or more. For off-market homes, the error rate may be higher.

4. Not tailored to individual properties: Zestimates are based on a broad set of data and are not tailored to individual properties. A property's value can be affected by a wide range of factors such as location, condition, and upgrades.

5. Not intended as an appraisal: Zestimates should not be used as a substitute for a professional appraisal or a Comparative Market Analysis (CMA) which are performed by licensed professionals.

In conclusion, Zillow's Zestimates can be useful as a starting point when researching a property's value, but it's important to understand their limitations. For a more accurate estimate of a property's value, it's best to consult with a local real estate agent or an appraiser.