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What Does Zestimate Mean in Real Estate?
HomeLight
Real Estate
5 months ago
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If you’re considering selling your home, your first thought is likely: How much is my home worth now? Over the past five years, home prices have surged 54%. Savvy homeowners are monitoring property values more often, and one tool they use is the Zestimate.

But what does Zestimate mean, and how can it help you estimate your home’s value?

In this brief guide, we break down what you need to know about Zestimates, their accuracy, and how they’re calculated. We’ll also share a few home valuation tips and other free online alternatives.

Start With a Free Home Value Estimate

Enter a few details about your home, and we’ll provide you with a preliminary estimate of value in less than two minutes. This won’t replace a home appraisal, but it can be a helpful starting point.

Request Estimate

What does Zestimate mean?

A Zestimate is an estimated market value for a home, provided by Zillow, the largest online real estate marketplace in the U.S. It uses a proprietary algorithm to predict a home’s worth based on various data points. Zestimates are intended to give homeowners a starting point for understanding their property’s value.

Why you might want a Zestimate

Knowing your home’s estimated value can be beneficial for several reasons:

How is a Zestimate calculated?

Zestimates use a sophisticated neural network-based model — what’s often referred to as an Automated Valuation Model or AVM. Many reputable real estate companies provide free AVMs that incorporate data from numerous sources. These include:

  • Public information such as county and tax assessor records
  • Feeds from hundreds of multiple listing services and brokerages
  • User-submitted data, such as unique property details
  • Recent nearby comparable home sales (comps)

A Zestimate will also incorporate:

  • Home characteristics (square footage, location, number of bathrooms)
  • Market trends, such as inventory and demand levels
  • Seasonal changes in housing markets

How accurate is a Zestimate?

Zillow currently has data for over 110 million U.S. homes. The company cites the following nationwide median Zestimate error rates:

  • On-market homes: 2.4%
  • Off-market homes: 7.49%.

According to Zillow, Zestimate’s accuracy can vary and depends on the availability of data where the home is located.

“Some areas have more detailed home information available — such as square footage and number of bedrooms or bathrooms — and others do not. The more data available, the more accurate the Zestimate value will be,” the company states on its website.

What can affect Zestimate accuracy?

While Zestimates offer a useful starting point for understanding your home’s value, several factors can impact their accuracy:

  • Data availability: Zestimates rely on available data, and if certain data points are missing or outdated, the estimate may be less accurate.
  • Property uniqueness: Unique or custom-built homes may not have many comparable properties, making it harder for the algorithm to estimate accurately.
  • Local market conditions: Rapidly changing market conditions can affect the accuracy of Zestimates, as the algorithm may not immediately reflect recent trends.
  • Home updates and renovations: If you’ve made significant improvements or renovations to your home, the Zestimate might not reflect these changes unless updated data is provided.
  • Mistakes in system data: The date and price of a home’s last sale play a big role in the value estimate. If this information is inaccurate, it impacts comparable sales and can throw off a Zestimate.
  • Tax assessment errors: Since Zestimantes also use property tax records, if an assessor enters wrong information or if the assessor’s database has inaccurate facts about the home, the assessed value may be incorrect.

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