Your Zestimate Is Not Your Home Value. Here's Why.

I was recently asked by Moneywise Magazine to weigh in on Zestimates, specifically whether homeowners can trust them, and what to do if they think their Zestimate is wrong. My answers got me thinking, so I decided to write the long version.

As a real estate agent, analyzing housing data isn't something I dabble in occasionally. It's my job. And, after more than a decade of evaluating Automated Valuation Models (AVMs), I've learned a few things and seen some things that raised my eyebrows. Here's what homeowners need to know.

What is an Automated Value Model (AVM)? An Automated Valuation Model (AVM) is software that uses algorithms and databases to generate instant estimates of real estate market values. It does this by analyzing public records, market trends, and recent sales against what the models are programmed to view as "comparable properties."

While hundreds of AVMs are out there, most consumers gravitate to well-known app-friendly versions like Zillow, Redfin, or Homes.com. Lesser known platforms can easily be found at data broker websites and most major banks. A Few Things You'll Notice ( ... fast)

Visit a few of these aggregators on a given day, punch in your address, and you'll see that each one provides different results, oftentimes by wide margins. Visit a few more, and it's not uncommon to accumulate estimates for the same home that vary by 15 to 20 percent.

Come to find out, determining what is or isn't a "comparable property" is not something a computer does very well. That's probably the reason AVMs include legal disclaimers making it abundantly clear that the number they're throwing out there is definitely, most assuredly, and absolutely is not an appraisal.

More concerning than the wide range of values, are the swings that can occur inside a single model. I've seen a Zestimate move $100,000 overnight. Not over a year. Not over a quarter. Overnight.

Granted that was the worst instance I've come across, but I watched it happen in real time. Zillow keeps its proprietary algorithm confidential, so I'm not aware of any explanation for how or why that happens, but through my professional experience I have an idea.

My working theory is that Zillow's AVM can overreact to new and active listing prices. In a market where aspirational pricing is common, that's a problem. A seller listing a home $75,000 over current market value isn't market data. It's wishful thinking.

The opposite is just as true. A homeowner listing at $1 to spark a bidding war or pricing low because they need a quick sale isn't revealing market value. They're executing a strategy.

Any algorithm that leans heavily into asking prices is vulnerable to distorted inputs and, ultimately, distorted outputs. Whenever inputs are off, the results will be too. And at the end of the day, I have a hard time trusting any algorithm, or person for that matter, that won’t explain to me how it reaches conclusions when money is on the line.

Why No AVM Can Get It Right

Not just dunking on Zillow here. All AVMs share a foundational problem too: They rely on public data which is always incomplete and often inaccurrate more often than you'd expect.

Public records routinely contain errors and discrepancies in home build type, square footage, finished living area, and even bedroom, bathroom, and garage space "counts." Architectural style is commonly recorded insufficiently and incorrectly, even though it's one of the most influential factors affecting a home's market value. A ranch isn't a two story, a bi-level, or a split level, and square foot values fluctuates significantly between floors. What's more, AVMs have no reliable way to recognize and weigh unique features, improvements, and drawbacks that make every property different. Even if the data alone could somehow be made perfect, an algorithm still won't be able to account for the range of complex and competing economic variables that determine what a home is worth at a given point in time.

If you're interested in learning more about this topic you can read the four factors that affect home prices on my website under Seller Resources.

What to Do if You Think Your Zestimate Is Wrong

Most importantly, never assume your Zestimate (or any AVM for that matter) is accurate. They can't be, it's the nature of the beast. At best they can be used for reference point. If a bad estimate bothers you for some reason, here's what to do:

Make sure your home details are entered correctly at the county level.

That's it. That's the big secret. Don't tell anyone.

The last time that information was updated was when you bought and closed on your home, or when you applied for permits to make improvements since. Make sure square footage, finished area, and bedroom, bathroom, and garage counts are all listed correctly.

If you decide to move forward, submit a correction request directly to the County Assessor's office. In turn, all AVMs out there including Zillow will update their estimates because public records are their shared/root data source. Before doing anything formally, keep in mind that correcting information at the county level will also update your Assessor's AVM, which may later affect your property tax assessment too.

The Bottom Line: No Algorithm Can Walk Through a Front Door.

It's fine to use AVMs for general reference purposes, but if you need a credible assessment of home value, you're better off working with an experienced real estate professional.

You can do that in a couple of ways without formally hiring an agent to list your home:

Order an appraisal from a licensed appraiser (roughly $400–$700). These reports are completed by a state-certified appraiser who strictly follows the Uniform Standards of Professional Appraisal Practice (USPAP). Turnaround is typically about 10 days from inspection to report.

You can also request a Broker’s Price Opinion (BPO) from a licensed real estate agent (roughly $50–$250). While not governed by USPAP standards, real estate agents are trained to assess market value using current conditions, buyer behavior, and pricing and preparation strategy—factors that often fall outside an appraiser’s scope.

There are simply too many variables for any computer program to accurately account for. Getting it right takes time, professional expertise, and yes, money.

Your home is one of your biggest assets. Treat it like one.

Have questions, or want a professional opinion on your home's value in the Denver Metro market? Reach out, let's talk. I'm here for you.

Learn more about me and how I work here.

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