Just like everyone else, you started your home search online. And just like everyone else you started with one of the biggest real estate sites, Zillow. I mean why not with those awesome Zestimates, right? Well, don’t start packing just yet. Zillow’s Zestimates are often inaccurate, widely inaccurate.

Ask any Realtor about Zillow Zestimates and they will concur. Mostly what they will tell you is that pricing a home is difficult and uses a lot of different types of information. They use publicly available information such as comparable sales and tax assessments. They also use their knowledge of the local markets, actual verified stats on the house (updates, condition of the home and property, etc.) and things like local schools, buyer or seller motivation and such to come up with an accurate price for a home.

Zillow, on the other hand, uses something called automated valuation models, or AVMs, to come up with a figure. AVMs use an algorithm to search for publicly available information about a property to predict value. While on paper it would seem to be a great idea, it has its limitations. These limitations often produce a value that is often 5% or more off in either direction. One thing that is always changing is the market which may differ from neighborhood to neighborhood. It also doesn’t take any updates on the property into the algorithm, or the value of a good school system.

School systems are another good example of an intangible value addition to a property. In some places property values will be highly affected by which school system if falls in. Those school districts aren’t determined by zip code. Even in more rural areas this can be true too. Some school district lines in those kinds of areas are drawn in all kinds of crazy shapes. The same zip code can have 3 or even more districts because of the less densely populated areas.

What AVMs can really only look at if closed sales in a particular zip code and get the average, along with tax assessments and such. So what happens if there aren’t any comparable in the zip code? Well, let’s out it this way, if you live in an area where tax assessments are not even closely reflecting actual sales, then the Zestimate will be very off. For instance, in the Maryland, DC and Virginia areas Zestimates on homes are 10-20% off about half the time. The area is pricey, so that percentage wrong is a hefty difference (like $15,000 to $50,000 difference). In other areas it’s been shown that Zillow’s Zestimates only fall within the 5% admission that Zillow has conceded only about 25% of the time.