Understanding Zillow Estimates and Their Real-World Impact

If you’ve ever typed an address into Zillow, you’ve seen the big number labeled “Zestimate.” It looks official, but how close is it to the actual market value? In this guide we’ll break down what drives a Zestimate, how reliable it is, and why recent lawsuits matter for buyers and sellers.

What Goes Into a Zestimate?

Zillow builds its estimates from public records, recent sales, tax data, and a mix of algorithms. The system looks at the size of the home, number of bedrooms, lot size, and even nearby school ratings. It then compares the property to similar homes that have sold recently. Because the data set is huge, the estimate can be fast, but it’s only as good as the information it receives.

For example, a 2BHK flat in Mumbai may show a Zestimate that reflects recent price trends in that neighborhood, but if the public record missed a recent renovation, the number could be off by a lot. The same happens in U.S. markets – a home that’s been upgraded may still get a lower estimate if the changes aren’t on file.

How Accurate Is the Zestimate?

Studies show Zillow’s overall accuracy hovers around 5‑10% of the true sale price. That means a $300,000 home could be estimated anywhere between $270,000 and $330,000. In some hot markets like New York City, the gap can be wider because prices move fast and data lags behind. If you’re thinking of using a Zestimate to set your asking price, treat it as a starting point, not a final figure.

Homeowners can improve their Zestimate by updating the home facts on Zillow. Add recent renovations, correct square footage, and update the number of rooms. Once you claim the property, you can edit details, and Zillow will recalculate the estimate.When it comes to buying, don’t rely on a single number. Compare the Zestimate with other tools, talk to a local agent, and look at recent sales of similar homes. That gives you a clearer picture of what the market actually pays.

Why do lawsuits matter? In 2025, Zillow faced multiple suits alleging that its estimates misled buyers and sellers, especially when the company promoted “Zillow Offers.” Plaintiffs claimed the company’s own numbers inflated expectations, leading to financial loss. While the cases are still unfolding, they highlight the risk of treating a Zestimate as a guarantee.

For renters, the Zestimate can still be useful. It helps gauge whether a listed rent is too high compared to the local market. But remember, rentals have different dynamics – location, amenities, and lease terms often weigh more than the raw property value.

Bottom line: Zillow estimates are a handy reference, not a legal valuation. Use them to get a quick sense of price, then dig deeper with local data and professional advice. Updating your home's details can tighten the estimate, and staying aware of ongoing lawsuits keeps you from over‑relying on the number.

Whether you’re buying, selling, or just curious about your home’s worth, treat the Zestimate as a conversation starter. It opens the door to deeper research and smarter decisions, without locking you into a possibly inaccurate figure.