Why Your Home Isn't Worth What Zillow Says

If you've ever looked up your house on Zillow and felt either thrilled or insulted by the number, you're not alone. On a recent episode of The Lake Norman Pulse, Jen and Barrie of Foster Rojahn Premier Properties talked about the Zestimate, and why that number shouldn't be the one you list your home at.

What a Zestimate actually is

A Zestimate, like the estimates on Realtor.com, Homes.com and similar sites, comes from an automated valuation model (AVM). It looks back at comparable homes that recently sold nearby and produces a number. What most people miss is that Zillow publishes an error range alongside the estimate. Almost nobody looks at the range. They see the single figure and treat it as fact.

What the algorithm can't see

An AVM never walks through your house, and on Lake Norman that's a real problem. Very few lake homes are truly alike. One might sit in a cove with limited water depth but a beautiful dock. Another might look out on wide open water. Those lots carry very different land values, and a model built on nearby sales can't reliably tell them apart.

The same goes for things that don't show up in the data: a steep driveway, a sloped backyard, the view, how neighboring lots affect yours. Barrie pointed to her own neighborhood of about a thousand homes. Buyers once paid a premium for the prime lots there, but decades later an automated estimate lumps them together with everything else. It also can't account for timing. Spring usually brings the most buyers and the strongest prices, while summer and fall markets are thinner, and wider economic events can shift demand too.

Why pricing off the Zestimate backfires

Using a Zestimate as your list price often means starting too high. Barrie described a recent showing: an older home with a newer pool and a stunning covered outdoor kitchen, but damaged doors and floors inside. It was priced well above the comps. She suspects the seller added what he'd spent on the upgrades to what he thought the house was worth, then found an agent willing to list it there.

The trouble is that improvements rarely return dollar for dollar. An overpriced home tends to sit, pick up price reductions and invite lowball offers, which is the opposite of what a seller wants.

When Zillow gets closer

Jen and Barrie are fair to Zillow. Zestimates aren't always wrong. They tend to be closest in tract or single-builder neighborhoods, where homes are similar in age and layout. Even there, finishes and flooring can separate two otherwise identical houses. And the model can miss low as well as high. On the lake, a Zestimate may undervalue a home whose upgrades, views and dock the data doesn't capture. For custom homes, acreage and higher price points, an automated number becomes even less reliable.

The bottom line

A Zestimate is a starting point, not a price. If you're wondering what your home is actually worth, have a local agent who knows the market walk through it and check the numbers. The Foster Rojan Premier Properties team is happy to fact-check Zillow, or any other estimate, for you.