In this instructional video, seasoned real‑estate broker, mentor, and investor Joe Homs (over 40 years of experience) examines Zillow’s Zestimate and its reliability for property analysis. He cites Zillow’s nationwide median error rates—1.9% for on‑market homes and 6.9% for off‑market homes—explaining that accuracy hinges on the amount of local data (square footage, bedroom/bath counts, etc.). Homs clarifies that the Zestimate reflects an average of recent community sales, which can be misleading for distressed or atypical properties that sit at the low end of the market. He advises using the Zestimate primarily as a community benchmark to gauge a property’s after‑repair value (ARV). To obtain a more precise ARV, Homs recommends accessing the Multiple Listing Service (MLS) directly for up‑to‑date comparable sales and using specialized tools like Pelleego (www.pelleego.com), which pulls MLS data and incorporates purchase price, closing costs, commissions, hard‑money fees, and other expenses to determine profitability. He stresses the importance of cross‑checking multiple sources before forming an offer and points viewers to a related video that outlines three methods for accurate ARV calculation.
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In today's video, we're going to take a look at Zillow's famous Zestimate and whether or not it's accurate to help you analyze properties. Coming up next. If you're used to sourcing your own deals, I'm sure you've run into the problem where the current homeowner thinks that their home is worth their current Zestimate. But are they right? Before we dive in, I'd like to introduce myself. I have over 40 years of experience as a broker, mentor, and investor. Make sure that you never miss your chance to learn from my successes and my mistakes by subscribing to this channel. How accurate is the Zestimate? According to Zillow, the nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 6.9%. The Zestimate's accuracy depends on the availability of data in a home's area. Some areas have more detailed home information available, such as square footage and number of bedrooms or bathrooms, and others do not. The more data available, the more accurate the Zestimate value will be. Okay, so when you look at the Zestimate, The Zestimate is basically an average of what is going on in that community. So everything that's sold in that community is going to show up in the Zestimate. The problem is if you're looking at distressed property, then that, that figure is not going to be there because that figure is basically going to be at the bottom. What you want to use a Zestimate for is to establish the after repair value Which is the value of the property once it's been fixed up. So what resources can you use to get a more accurate after repair value? For me, since I am a broker, I have access directly to the Multiple Listing Service, which gives me direct information and timely information. So it's easy for me just to pop onto the MLS, search the properties in that area. Look at the photos real quickly and determine what the after repair value should be and even determine what the price of that property should be selling for in its current condition. So that is one of the resources that I would use. There are other resources that I use as well. So you can go on a different website, a website that I like to use called Peligo. www.pelleego.com. What Pelleego does is really kind of similar to what Zillow does, but it goes a little bit further. It'll give you the after-repair value on a piece of property by getting that same information directly from the Multiple Listing Service, and then it goes into the calculations to make sure that if you're buying this property at a certain price, you're paying closing costs, you're paying commissions, You're paying what hard money costs, whatever fees are involved with the purchase of this home, that you're going to make a profit at the end of the day. And I believe at the end of the day, that's what an investor is looking for, is the complete picture. Is this going to be a profitable property for me to buy as a flip? Always take Zillow's Zestimate with a grain of salt. Make sure you check multiple websites before you estimate what the after repair value will be and before you put your offer. If you need help determining what the ARV is, click on this video right here. I show you 3 different ways that you can use to make sure your offers are accurate. See you on the next one.
