Within the Real Estate industry it is no secret that Zillow's Zestimate is not the most accurate and/or a hit or miss. Good for Zillow - but not so good for all Real Estate professionals - that many consumers do not know that. Through clever brand positioning and massive advertising budgets they sure make it look like that it is an authority when it comes to Real Estate values and pricing. But it is not and as a REALTOR® in Silver Spring, MD and beyond, I spend a good amount of time educating my seller and buyer clients as to why Zillow can only provide a general idea at best.
Zillow depends on free information available on the interwebz and any free listing details and free home facts (notice a pattern here?) the Real Estate industry & professionals as well as home owners provide. To be fair, Zillow (sort of) discloses that: "The Zestimate is Zillow's best estimate of a home's value. It is based on a blend of valuation methods, each of which may produce a different estimate depending on the available data."
Zillow & Co. are, simply put, data aggregation websites and this free data collection system is flawed. It cannot display and take into consideration all home and neighborhood facts that are relevant when pricing a home for sale because extensive information is available or freely provided for some but not for others. Just look at "claim your home" and "update your home facts" for example. I have no statistical knowledge about how many home owners actually do that but I'm guessing that there aren't many in the grand scheme of things.
It is also not uncommon to see recent sales included in a Zestimate that are not even close to being a comparable property. I have had several 2-story garage condos listed in Wheaton, Zillow "valued" those as detached single family homes and arrived at a much, much, much higher Zestimate (in my experience, more often than not, the Zestimate is too low).. which looked great on virtual paper but it was not the accurate market value.
One other BIG reason why Zillow's Zestimate can be (way) off is that they display and include REFINANCES for their "guesstimation" of value. How do I know that? Because I just checked on my own home and my refi that I did in December of last year shows up as a SALE. That's a problem - nevermind untrue and misleading - since it impacts Zillow's opinion of the value of my home and comparable homes in my subdivision. I did not sell my house. I did not refinance at 100% value. I brought cash to the table to lower my mortgage amount and monthly payment. My house appraised for much more than I refinanced for. But Zillow does not know that. They could find out - based on information that is (unfortunately) publicly available - that it was a refi and not a sale and they should either disclose that fact or better yet, not include it at all since they have NO knowledge of the appraised - higher than the refi amount - value!
Including refinances as sales (I am assuming that my refi can't possibly be the only one that Zillow displays as a "sale") with no regard to the loan-to-value-ratio impacts the property values Zillow displays and is one BIG reason why the Zestimates can be way off and should not be relied upon.
What can you do if you want to know the value of your home? Consult the experts, the boots and heels on the ground, the actual people who gather the information that Zillow & Co. so freely obtain, your REALTORS® who are active in your community and who have knowledge of and access to all the information that is needed to arrive at an accurate price-range - consult a REALTOR® and/or hire an appraiser.