Seriously, when (and why) did we start trusting an algorithm more than actual market data?

It's 9 PM on a Wednesday. I'm responding to yet another email that starts with: "Zillow says my home is worth $1.2 million, but you're suggesting we list at $975K. Can you explain?"

Yes. Yes, I can.

But first, let me tell you about the seller who insisted on pricing their Felton home based on Zillow's estimate. We'll call her Shirley (not her real name, but definitely her real mistake).

Shirley's Zillow "Zestimate": $825,000. My suggested list price: $699,000

What it sold for after 6 months and two price reductions: $675,000

The gap between the Zestimate and reality? About $125,000 and six months of her life she'll never get back.

HOW ZILLOW ACTUALLY WORKS (SPOILER: NOT WELL)

Here's what most people don't understand about Zillow's algorithm:

It's looking at:

- Public tax records (which can be out of date)

- Recent sales in your area (sometimes VERY broadly defined)

- Square footage (which might be wrong)

- Number of bedrooms/bathrooms (ditto)

- Any updates you've manually added (which it can't verify)

What it's NOT looking at:

- The actual condition of your home

- The deferred maintenance you've been ignoring

- The weird layout that everyone comments on

- The fact that your "updates" were DIY projects from 2003

- The reality that your street floods every winter

- The septic system that's one bad day from catastrophe

- The mold situation in the crawl space

- That your neighbors have 47 broken cars in their yard

In other words: Zillow is doing math without visiting the property. And in real estate, that's like diagnosing a patient via email.

THE SANTA CRUZ COUNTY PROBLEM

Zillow's algorithm is particularly terrible in our market. Want to know why?

1. EXTREME VARIABILITY

In Santa Cruz County, you can have a $500K property and a $5M property within a half-mile of each other. The algorithm struggles with this.

I've seen Zillow estimate a stunning ocean-view home in Aptos at the same value as a fixer-upper in Felton because they have similar square footage and bedroom counts. Never mind that one has panoramic Monterey Bay views and the other has panoramic views of... more redwoods.

2. MOUNTAIN PROPERTY CHAOS

Zillow cannot accurately value mountain properties. Full stop.

It doesn't understand:

- The premium (or discount) for different access roads

- How fire zones affect value

- The septic vs. sewer distinction

- Well water vs. municipal water impact

- The difference between 2 acres of usable land vs. 2 acres on a 60% slope

- How much rebuild restrictions matter

- What various deed restrictions mean for value

I had a client convinced his 3-acre Boulder Creek property was worth $1.3M because Zillow said so. Turned out 2.5 of those acres were essentially vertical and the buildable area was already maxed out. Real value? About $750K.

3. THE UNIQUE PROPERTY PROBLEM

Have a custom home? Unique architecture? Unusual lot configuration? Congratulations, Zillow is essentially guessing.

The algorithm works (sort of) for tract homes in subdivisions where everything is similar. It completely falls apart for one-of-a-kind properties.

I recently listed a stunning mid-century in the mountains. Zillow said $895K. It sold for $1.2M to a buyer who understood what they were getting. The difference? Zillow couldn't account for the architectural significance and the cult following of that particular style.

THE REAL COST OF ZILLOW MYTHOLOGY

Let me break down what believing Zillow actually costs sellers:

SCENARIO 1: You Price Too High

- Your home sits on the market

- It becomes "stale" (yes, that's industry jargon for "everyone's already seen it and passed")

- You reduce the price (and look desperate)

- You reduce it again (now you look REALLY desperate)

- You finally sell for less than if you'd priced it correctly initially

- You've wasted 4-6 months of your life and probably $20K-50K

SCENARIO 2: You Price Too Low

This almost never happens because Zillow usually overestimates, but when it does:

- You leave money on the table

- You spend the rest of your life wondering "what if"

- You resent your agent (even though they told you to list higher)

THE QUESTIONS YOU SHOULD ASK INSTEAD

When I meet with sellers, here's what I wish they'd ask instead of "What does Zillow say?":

1. "What are comparable homes actually selling for?"

Not listed for. SELLING for. There's a massive difference.

I'll pull actual closed sales of truly comparable properties. Not just similar square footage, but similar:

- Condition

- Location desirability

- Lot characteristics

- Views

- Updates

- Access

- Infrastructure

2. "What's the current market absorption rate?"

Translation: How many months of inventory are we dealing with?

In a 2-month inventory market, we can be aggressive with pricing. In a 10-month inventory market? We need to be realistic.

3. "What are you seeing in the trenches right now?"

I'm in homes every week. I know:

- What buyers are actually responding to

- What's sitting on market and why

- What's going pending quickly and why

- What appraisers are saying

- What inspectors are finding

- What lenders are requiring

This real-time intelligence is worth infinitely more than an algorithm that's working off 3-month-old data.

4. "How does my home compare honestly?"

This is the question that separates good sellers from frustrated ones.

I'll tell you the truth:

- Your kitchen update is nice, but it's not luxury-level

- Your view is pretty, but it's not ocean

- Your lot is large, but half of it is unusable

- Your finishes are dated

- Your layout is awkward

- Your location has some challenges

This isn't mean. It's the reality that buyers are seeing. And we price based on reality, not your emotional attachment.

THE APPRAISAL REALITY CHECK

Even if you find a buyer willing to pay your Zillow-estimated price, you still have to clear the appraisal.

I've seen deals fall apart because:

- Buyer loved the home and offered $1.1M

- Zillow said it was worth $1.1M

- Appraisal came in at $950K

- Buyer only qualified for loan based on appraised value

- Deal died

All that time wasted because we priced based on an algorithm instead of market reality.

WHEN ZILLOW MIGHT BE CLOSE (RARE, BUT FINE IT HAPPENS)

To be fair, there are situations where Zillow's estimate might be in the ballpark:

- Newer tract homes in subdivisions with lots of recent comparable sales

- Homes that haven't been significantly modified from their neighbors

- Areas with very consistent pricing

- Recently updated tax records

- Markets with steady, predictable appreciation

But even then, I've seen it be off by $30K-100K. Is that a margin of error you're comfortable with?

WHAT I ACTUALLY DO INSTEAD

When pricing a home, here's my process:

1. COMPREHENSIVE PROPERTY ASSESSMENT

I walk every inch. I note everything. The good, the bad, the ugly, and the "we should probably mention this in disclosures."

2. DEEP MARKET ANALYSIS

I pull:

- Active listings (your competition)

- Pending sales (what buyers are currently committing to)

- Closed sales (what appraisers will use)

- Expired listings (what didn't work and why)

- Withdrawn listings (what gave up)

3. CURRENT MARKET CONDITIONS

- Inventory levels

- Days on market trends

- List-to-sale price ratios

- Buyer demand indicators

- Seasonal factors

- Economic indicators

- Interest rate environment

4. UNIQUE PROPERTY FACTORS

- Specific location advantages/disadvantages

- Property-specific features

- Condition compared to market

- Appeal to likely buyer pool

- Potential appraisal challenges

5. STRATEGIC PRICING RECOMMENDATION

Not what Zillow says. Not what you want to hear. What will actually result in a successful sale at the best possible price in a reasonable timeframe.

THE BOTTOM LINE (THAT NOBODY WANTS TO HEAR)

Zillow is a marketing company that makes money from advertising and selling leads to agents. They're not in the business of accurate valuations. They're in the business of getting you onto their platform.

The "Zestimate" is a feature designed to drive engagement, not provide accurate pricing guidance.

And they know it. Zillow themselves say the Zestimate has a median error rate of about 2% for on-market homes and nearly 7% for off-market homes. In Santa Cruz County, where the median home price is $900K, a 7% error means they could be off by $63,000.

Would you trust a tool that could be off by the price of a new luxury car?

WHAT TO DO INSTEAD

When you're ready to sell:

1. Interview agents who know your specific market (not just Santa Cruz County, but your specific neighborhood/area)

2. Ask them to show you their comparative market analysis methodology

3. Look at their recent sales (did homes sell close to list price? How quickly?)

4. Ask them about current market conditions and trends

5. Listen when they tell you pricing strategy, even if it's not what you want to hear

6. Make a decision based on data, not an algorithm

And here's the thing - a good agent isn't going to lowball you. We make more money when you sell for more. We're literally incentivized to get you the highest possible price.

But we're also incentivized to actually SELL your home, not have it sit on market for months while you wait for a buyer who believes Zillow.

THE TRUTH NOBODY WANTS TO SAY OUT LOUD

Your home is worth exactly what a qualified buyer will pay for it in the current market.

Not what you paid for it. Not what you've spent in updates. Not what Zillow says. Not what your neighbor's home sold for three years ago. Not what you need to get to buy your next place. What a buyer will actually pay. Today. In this market.

Everything else is just noise.

SO SHOULD YOU IGNORE ZILLOW COMPLETELY?

Look, check Zillow if you want. Use it as a starting point for curiosity. But understand what you're looking at: a computer's best guess based on incomplete data.

Then talk to an actual human who does this for a living, has walked your property, knows your market, and can give you real intelligence.

Think of it this way... If we wouldn't trust WebMD to perform our surgery, why do we trust Zillow to price our largest asset?

Bailey Copley

BC Estates & Homes

P.S. — If you're reading this because you Googled "is my Zillow estimate accurate," the answer is probably no. Let's talk about what your home is actually worth.