What is a Zestimate and should I use it to price my home?

A Zestimate is Zillow's automated estimate of what your home is worth. It's generated by an algorithm that analyzes publicly available data, recent sales in your area, tax records, property size, and other measurable factors, to produce a value estimate without anyone ever setting foot in your home.

It's useful as a very rough starting point. It is not your listing price, and it's not a reliable substitute for doing the actual market research yourself.

The algorithm can't see inside your home. It doesn't know your kitchen was renovated two years ago, that you added a finished basement, that your backyard is smaller than the neighbor it's comparing you to, or that the foundation has a known issue you've been managing. All of those factors move price significantly, and none of them are in the data Zillow has access to.

Zillow actually publishes its own accuracy data. Nationally, about half of Zestimates come within roughly 4 percent of the final sale price, which sounds decent until you realize that on a $400,000 home, 4 percent is $16,000 in either direction. For homes that aren't actively listed, meaning Zillow doesn't have a current price or recent listing to anchor to, accuracy drops further. Off-market homes regularly see Zestimates that are 10 to 15 percent off from actual market value.

When Zestimates run high: This is the more dangerous scenario for sellers. If Zillow overestimates your home's value and you price based on that number, you'll enter the market overpriced. Your home will sit. Buyers will assume something is wrong. You'll reduce the price under pressure. And you'll likely sell for less than if you had priced correctly from day one. I've watched this play out more times than I can count.

When Zestimates run low, also a problem though less common, you risk pricing below market and leaving real money on the table.

Pull your own comps from recent closed sales instead. Zillow and Redfin both show sold data. Filter for homes within a half-mile, similar square footage, similar age and condition, closed in the last 60 to 90 days. That data applied thoughtfully to your specific property will give you a more accurate picture than any automated tool.

Use the Zestimate the way you'd use a weather forecast from two weeks ago. It gives you a general sense, but you wouldn't plan a wedding around it. Do the work. Pull the comps. Price based on what buyers in your market are actually paying right now.