How Accurate is Zillow’s AI Pricing for Home Sellers?

By Tania Michaels

Tania Michaels is a seasoned real estate professional with nearly two decades of experience in the field. She began her career as a top loan originator before becoming a key player in land acquisitions, closing over $215M in transactions.

Most homeowners check their Zestimate before selling. Who wouldn’t want to when it’s quick, easy, and feels official? After all, it’s powered by Zillow’s more sophisticated AI system. But in 2025, even smart algorithms miss what really determines your home’s value.

So if you’ve got a Zestimate or any other online estimate, ask yourself: could it be wrong? Here are examples of two of the most common problems I see with AI valuations today.

Example one: A potential client called us to find out why their house, listed for $1 million, was not selling. In two months, they had two showings and zero offers at that price. They believed they were listed at a discounted price. Why? Because the online estimate was $1.1 million.

Example two: A client of ours looked online and found an estimate for their house of $545,000. When I walked through the house, I noticed solar panels, all new windows, and a beautiful corner lot near a park. After reviewing buyer demand and comps, we listed it at $589,000, and it sold for $595,000. That’s a $50,000 difference from the online estimate.

Today, I’ll break down how an online estimate works, where it fails, and what smart sellers are doing instead.

How online estimates work. Real estate sites that publish estimates use Automated Valuation Models (AVMs) that pull from public records, recent sales, geographic trends, and some MLS info where available. This means there’s a heavy emphasis on numerical data, not image analysis.

In other words, it’s basically blind and feels around for the numbers. It analyzes hundreds, maybe thousands, of homes but only knows recorded data. It is only as accurate as the information it finds. So if your upgrades aren’t recorded, or if your neighborhood has a mix of home styles and values, the estimate could be inaccurate.

Where it falls short for sellers. An online estimate does not walk through your house; it cannot judge lighting, finishes, or curb appeal. Zillow themselves admit that their estimates can be off by 2.4% for listed homes and 6.9% for off-market ones. Other statistics say they’re off by between 5% and 10%. That could mean a $40,000 swing on a $600,000 house.

Online estimates and market shifts. The real estate market shifts quickly, as we’ve seen in 2025. A dip in rates or some negative national event can change buyer demand in days. The online sites update often, but not in real time. Sometimes they don’t update for 30, 60, or even 90 days.

They rely on past data like closed sales or public records. So by the time the algorithm catches up, the pricing window could have changed. But you wouldn’t know that just by looking at the online estimate.

How to use it the smart way. Think of Zestimate like a weather app. It gives you a general forecast, but you still check the sky before heading out. The same goes for pricing your home: it’s a ballpark figure, not a pricing strategy.

A local expert brings in the real story by factoring in what’s selling now, what buyers are prioritizing, and how your home stacks up against the competition. They’ll take into account all the current conditions, like buyer demand, recent upgrades, or necessary repairs.

Let’s compare that estimate to what someone would actually pay for it in today’s market. You might be sitting on more equity than you realize and risk pricing too low, or pricing too high and wasting a lot of time on the market.

Book a personalized pricing consultation, and I’ll show you how the online estimate stacks up against what’s happening in today’s market. We’ll personally visit your home and consider all of its unique features. If you’re interested, just call, text, or email us at (702)583-6555 or sales@MichaelsTeam.com. We’ll show you what a buyer would pay for your property today.