In this video, Austin Klar— a former lawyer turned Bay Area real‑estate agent and developer— warns viewers against obsessively trusting Zillow’s automated home‑value estimates (Zestimates). He explains that Zestimates are generated from outdated public records such as tax data and MLS listings, which often miss recent renovations, finished basements, or changes in square footage. Klar highlights numerous qualitative factors a computer cannot assess: functional layout, natural light, condition of appliances and systems, backyard exposure, noise, and nearby construction. He notes that while Zestimates can be a useful starting point in homogenous, planned‑development communities (e.g., new condo towers), they are far less reliable in older, custom homes typical of San Francisco and Marin County. He cites anecdotal examples (Zillow CEO’s home, a West Portal sale) and published studies showing median error rates of 2% for on‑market homes (≈ $40k on a $2 M home) and over 7% for off‑market homes (≈ $150k). The core message: to determine true market value, consult a local professional who can physically inspect comparable properties. Klar ends with a call to action, offering his personal contact information and encouraging viewers to subscribe for more market insights.
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Ever since the pandemic started and home values went through the roof, people became obsessed with checking their Zillow estimates every single day, seeing the value of their home go up and up and up. And then when interest rates started rising, maybe seeing the value of their home go down, down, down. Now they're fixated, checking every single day, seeing if that value is going back to what it was during the pandemic, and it needs to stop. You should not obsess over what Zillow's computer algorithm says about your home's value. And in this video, I'm gonna tell you exactly why. What's up everyone? This is Austin Klar, your lawyer turned real estate agent and real real estate developer in San Francisco and Marin County. I've been a Bay Area resident for over a decade, giving me in-depth firsthand knowledge of what it's like to live and work here. If you're thinking about relocating and want more information about the market, definitely reach out to me. My contact information is in the description below. I will personally answer every call, every email, every text, and I'd be more than happy to help you. And if you like videos just like this, please subscribe to my channel and don't forget to click the bell so you're alerted every single time I post a video. All right, so this video is all about why you should not fixate and why you should not trust what Zillow's computer algorithm says the value of your home is. At its core, you need to think about what the Zillow estimate is really based on. It's a computer algorithm that pulls information from tax records, from previous MLS listings, and from other public records. But the problem with tax records and other public records and old listings is that they're outdated and often they're inaccurate. How does that happen? Well, in San Francisco, for example, a lot of homes have these unfinished basements that if they're turned into, you know, livable finished spaces, add to the square footage of a home. So you might see tax records for a home say that a home is 2,000 square feet, but in reality, since the last person bought it 10 years ago, they've actually finished out an entire basement floor, fully legal, fully permitted, uh, and that information just isn't reflected in the old listing or even in the tax records. It happens all the time. So in reality, the house might be 2,500 square feet or 3,000 square feet, but records say 2,000, and Zillow, using those old inaccurate records, bases its value estimator on those inaccurate records. It's only taking into account what information is available to the computer. But there's a reason why when people buy homes, they don't just rely on what a computer says or what they see online. They actually go and see that home in person. And there are a number of things that you need to look for to figure out what the value of a home is that Zillow or any other computer algorithm isn't going to be able to take into account. For example, what's the layout of the home? Is it functional? Is there a bathroom door that leads straight from the kitchen? Are the 3 bedrooms that are listed in the tax records or on the prior MLS listing or even on the current MLS listing actually 3 real bedrooms, or is one of them just a tiny little space big enough for a desk or a twin bed and it happens to have a closet and a window so it's technically considered a bedroom even though functionally speaking nobody is going to be using it as a bedroom except maybe for an infant. Does the house have really good natural light or is it dark and dingy? Are the appliances or the floors or the HVAC system or any of the other fixtures and finishes in the house up to date, or any of them in disrepair or in need of updating? Is the backyard south-facing with incredible natural light, or is it stuck between two taller buildings and pretty much dark all day long? Can you hear traffic noise from the street, or worse, from inside the house? Is there a house next door that's undergoing a huge renovation that's going to last two more years? So if you were to buy this house, you were going to basically be living in a construction zone for the next couple of years, assuming it finishes on time. At the end of the day, a computer cannot perceive what a human can being there in person.. So when you're thinking about value, you need to take those aspects into account. You can't just rely on what the computer says. Now, there are some instances where Zillow estimates or other computer estimates actually are somewhat useful. If you're buying a unit in a planned development community or a high-rise condo building where, for example, the unit that you're looking at might be one of 20 other similar units that were all built around the same time, all had the same finishes and fixtures, then it might make a little bit more sense, and those Zillow estimates might be more accurate. But if you're buying in a place like San Francisco or Marin County where homes aren't really in planned development communities like they are in, you know, the Midwest or in the South, Zillow estimates are going to be a lot less useful. You have homes in San Francisco that are 100 years old, and maybe they've been updated 3 or 4 times during the span of its life. Maybe they haven't been updated at all. Zillow, as a computer, has no way of knowing the extent and quality of those updates. So it's a lot harder for a computer to get things exactly right in a place like San Francisco San Francisco or Marin compared to a place where there are, you know, more common planned development communities. And there are examples of estimates being wrong all the time. There are numerous studies on this. I mean, famously, the Zillow CEO's own home had a Zillow estimate of $1.7 million, and it ended up selling for about a million bucks. I just got buyers into a home in West Portal in San Francisco where the Zillow estimate was $2 million, and it sold for $1.8. These are just one-off anecdotal examples, but there are actual studies that have proven that Zillow estimates aren't always accurate. And in fact, Zillow's own website has the margin of error in certain instances over 2%. Now, that doesn't sound like a lot of money, but if you're buying, you know, average cost of a home in San Francisco is about $2 million, that's $40,000. And that's just the median margin of error. That means 50% of errors are actually higher than that. And that's for on-market properties. And it's even worse for off-market listings where the median margin of error is over 7%. So on an average home, which costs about $2 million, you're talking about $150,000 off the market. And that's just the middle marker. Some homes, estimates are more accurate, some less accurate. The bottom line of all of this is that you shouldn't trust or treat as dogma what an iBuyer, a Zillow estimate, a Redfin estimate, any computer estimate says about the value of your home. If you want to know the value of your home, talk to someone who actually has seen the comps in person, knows and understands what those places actually looked like in person, and go and look at other comparable properties that are on the market at that time so you can make a real-life assessment and not just rely on what a computer says. Well, there you have it. That's why you can't totally trust Zillow estimates. I do think they are a useful resource, but they are just a starting point. They are not the end-all be-all, and people should not hyperfocus on what Zillow says the value of a home is. There's so much more that needs to be taken into account. Market conditions change every single day. So if you want to know what the value of your home is, reach out to a professional. My contact info is in the description below. I will personally answer every call, every email, every text, and I'd more than happy to help you. And if you like videos just like this, please subscribe to my channel and don't forget to click the bell so you're alerted every single time I post a video.
