Revisiting Zillow

A few months ago, we wrote about Zillow right here, and we got such a huge response to that post, we realized that a lot of people have questions about Zillow and how exactly you can use it. This continues to be a topic that causes confusion, especially with homeowners trying to figure out what their homes are worth. As we mentioned then, Zillow is not a bad website…it’s just not a great website for identifying the value of your home. Why not?

  1. Zillow relies on radius searches, rather than searching based on neighborhood and home similarity. 

    When you type your address into Zillow, it pulls up all the data of recent sales within a certain radius of your home. It doesn’t know if your development is 20 years newer than the one next to it, or if you live next to a luxury gated community. It only bases the “zestimate” on recent numbers, regardless of neighborhood, which can cause a skewed value.

    Radius vs. Polygon Search

    This is two different search areas for the same property– on the left, a radius search that includes neighborhoods of higher end homes. This search would result in inflated values. On the right, a polygon search area specific to the neighborhood which would produce results of very similar homes and a much tighter value.

  2. Zillow does not know what the condition of your home is. As you probably know, condition greatly affects value in an appraisal! Maybe you live in an older neighborhood where many of the homes have not yet been updated, but you have a remodeled kitchen and brand new hardwood floors. Zillow would probably guess low on your value, because it is using data for homes that are not as updated. Conversely, you might be hoping to refinance in order to do some big updates on your home– if many homes in your area are updated, Zillow may give you an inflated estimate and unrealistic expectations.
  3. Zillow is primarily a lead generation platform for Realtors. If you’ve ever looked up your propertyRevisiting Zillow, you’ll have seen three Realtors listed on the right of the photo. If you are looking for a Realtor, look on Zillow! They have the past performance of Realtors going back one year, so you can make an informed decision about who you want to work with. However, for value, talk to an experienced appraiser who can look at the whole picture by analyzing the market, accounting for condition and location, and do a thorough job in identifying the value of your home.

What is your experience with Zillow? Do you like using it for researching the market around your home, or for anything else? Let us know in the comments!



  1. I did not know that Zillow uses a radius search. I thought its algorithm just looked for the most similar sales based on what it knows about the sales and goes farther if necessary. It is interesting to me that the program would be that simplistic.

    • Jeff Hamric says:

      Hey Gary,

      Sorry for the delay. I have been having issues with my blog, one of which I didn’t see your comment until today. Some of my plugins aren’t working correctly but they should be all good to go and updated by the end of the week. As far as Zillow using a radius, I may have oversimplified it. This is what they say and I will give you some real world results. According to Zillow when asked how they come up with the Zestimate and what’s in the formula, this is what they have to say,

      “We use proprietary automated valuation models that apply advanced algorithms to analyze our data to identify relationships within a specific geographic area, between this home-related data and actual sales prices. Home characteristics, such as square footage, location or the number of bathrooms, are given different weights according to their influence on home sale prices in each specific geography over a specific period of time, resulting in a set of valuation rules, or models that are applied to generate each home’s Zestimate. Specifically, some of the data we use in this algorithm include:

      Physical attributes: Location, lot size, square footage, number of bedrooms and bathrooms and many other details.

      Tax assessments: Property tax information, actual property taxes paid, exceptions to tax assessments and other information provided in the tax assessors’ records.

      Prior and current transactions: Actual sale prices over time of the home itself and comparable recent sales of nearby homes.”

      I don’t know the algorithm, but I have run several tests in neighborhoods that I am very familiar with. Take my home for example. In this case, the Zestimate was pretty close, within acceptable tolerance. This is not always the case, but for my house it was. Zillow returned 12 properties, going back nearly a year. Every sale was less than 1/2 mile away. My subdivision is large enough and my home close enough to the center that all of the homes were at least in the neighborhood. One of the homes they threw in was over 20% larger than my home. Really needless because without that, there were still 11 properties. If you were appraising my home, you would have chosen the most recent sales that were in the most similar condition to my home. In this case, Zillow would have been a help. It does OK in homogeneous neighborhoods with 3 to 4 models and a good number of sales to choose from. My only critique in this case is that it chose homes that had older sales dates; this area has seen appreciation over the prior 6 months.

      I have seen other situations where it pulled homes that were proximate, but in different neighborhoods with very different styles and values. So, you are probably right. It may not use a straight ‘radius’ like we may choose to use in MLS, but it does use distance to the exclusion of similar neighborhoods. In the example above, there were better sales that were over .50 miles away, but for whatever reason, it did not go past .50 miles. So where the rubber meets the road, Zillow seems to rank distance above age of sale, similarity and if the subject of the Zestimate is near a neighborhood boundary it will either overvalue or undervalue it depending on the neighborhood characteristics that it is near to. In a rural setting, of course the distance would be further than 0.50 miles. In all fairness, not knowing location influences, condition or neighborhood, using distance is about the best they can do, that and staying within a reasonable GLA variance. Thanks Gary!

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