Zillow, for years, has been saying that it is improving the functionality of the Zestimate to work well enough to make it their cash offer price. Now, this fact has always hid an uncomfortable truth: it never served Zillow’s stated interests to make this thing accurate as a tool for what you could sell your home on the open market. I’m not saying they didn’t want it to be accurate, I believe they did, but they had no real incentive to show you the same number they had. Even now, that it functions as an offer, do you think it serves them to show you, upfront, the MAX amount they’d be willing to pay?


As a wholsesaler, it is now their goal to know 2 things:

  1. How much the house is worth retail
  2. How much the average person is willing to sell them the house for

And them optimize the Zestimate to gather them as many leads as possible. But let’s be clear, the Zestimate never was, and never will be, intended to be an estimate of what your house was worth. People saying it’s inaccurate is moot point, in my opinion, as it was never really intended to be an appraisal. Especially when they started saying they intended to use it as their cash offers, which was years ago, we knew it would be beneficial for them to start displaying a number that suited themselves, instead of the consumer, and there’s nothing wrong with that as a business.


But, now, more than ever, the Zestimate is actually vey useful to me. Because it’s not an estimate. It’s an offer. So, you don’t go to Zillow to get an estimate, you get a baseline. I’ll gladly send every single one of my clients to Zillow to get a baseline, and if they are happy with the Zestimate as a baseline, I make them a guarantee. Either I sell it for more than that, or I sell it to Zillow. Simple.


It also functions as a tool for all sellers when comparing offers from cash retailers, wholesalers, or even private sales. You SHOULD NOT accept an offer less than the Zestimate. Why would you? Personally I think this may start to clean up some of the bad behavior common among cash offer companies, wholesalers, iBuyers, and some of the others who have racked up complaints from consumer watchdog groups.


Now, the Zestimate is an excellent tool for getting started. But, if the home has updates on the inside, it is likely to be way off. I had a listing presentation last night that showed Zestimate at $406k, my inital thought based on 15 year old pics was $415-$450k, but after looking at the house definitely more like $475-$490k.


So lets do some math,

Zestimate $406,000 -9% in fees to sell to Zillow= net $369,460

My low estimate $475,000 – $3000 listing fee + 2.5% to buyers agent – 1% closing costs= net $456,125

$86,665 better than Zillow’s Zestimate.


Now, Zillow still has the chance to review your property after they make their initial offer, and they may ask for some additional money off for repairs. I personally don’t believe they abuse this from what I’ve seen, they take possession of houses as-is and ask for reasonable amounts for extreme damage. But still, they will not be showing up to your home ever and offering more than their initial offer. So, in this case, the seller will net somewhere around $85,000-$100,000 more by selling with me than by selling to Zillow.


I hope this helps you understand the new function of the Zestimate and that I’ve tried to be as fair to all parties as possible!

Leave a comment with any questions.