The definition (from Zillow)…
The Zestimate® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions.
Lets take a look at how the zestimate differs from a real appraisal by studying what Zillow doesn’t do to calculate your zestimate.
Zillow Does Not Walk Through Your House- Representatives from Zillow do not personally walk through your house to observe its quality and condition first hand.
Zillow Does Not Consider That Your House Is Unique – In Zillow’s eyes your home is no better quality than the next house. It doesn’t matter if you have exotic wood or marble finishes or if you have custom built kitchen cabinets.
Zillow Does Not Verify The Square Footage Of Your Home- If Zillow doesn’t have accurate square footage on your home how can they give you an accurate value? They can’t.
Zillow Does Not Verify That Sales Are Truly Comparable- When you hire an appraiser to perform an appraisal on your home they will sift through all of the sales data to make sure the sales used in the appraisal are comparable.
Zillow Does Not Look At Pending Sales And Listings, Etc.- We all know that appraisers consider recently sold homes when choosing comparables but did you know they also analyze active and pending sales? Closed sales measure what happened in the past but pending sales and active listings can gives us insight into what is happening right now.
Resources: Zillow, Tom Horn