(Guest post by Broker and Divorce Real Estate Agent Joe Gordon)
While popular and easily accessible, automated valuation models (AVMs)—tools like Zillow’s Zestimate, Redfin Estimate, and other algorithm-based home value calculators are not appropriate for use in divorce matters, where real property value should be defensible and accurate.
Here’s why: AVMs are generated by computer algorithms using public records and general market data. They cannot see inside the home, assess condition, factor in recent renovations or disrepair, or account for location-specific nuances like views, lot desirability, or school district lines. They also lack insight into micro-market price fluctuations. These omissions can cause values to be significantly over- or under-stated, particularly in complex or distressed property situations, which are not uncommon in family law cases.
Even Zillow itself states that the Zestimate is only a “starting point” and should not be used as a substitute for an appraisal or expert opinion.
In fact, Zillow publishes its “accuracy data” on its website. Here’s the direct link: Zestimate Accuracy.
When you click on this link, you will see there are two sections: Active Inventory and Off Market. Obviously, the Active Inventory table is skewed because a real estate valuation has already been done to establish a list price.
You’ll want to scroll down to the Off Market section to see the actual error rates when you or your clients run a search without the house being on the market. You can click on any region to see how it varies.
- Less than 50% of Zestimates fall within 5% of the final sale price. That means for a $600,000 home, Zillow will value it within a $30,000 range less than half the time—and the variance is even greater the majority of the time.
- Errors can exceed 20% in more unusual or data-poor properties.
- On top of these percentages, the overall median error rate is another 7%.
These numbers are – literally – fictional, and the real estate industry knows it. No lender, appraiser, or real estate professional would rely on an AVM to determine a property’s market value in a transaction, underwriting, or legal setting. The margin of error is too high—and the inputs too limited—for it to be trusted in high-stakes decisions like equitable distribution.
Bottom line:While AVMs are easy to access, they often amount to junk data in the context of divorce. They lack the accuracy, context, and credibility required when real property is a central issue in the case.
For divorce cases, the only appropriate valuation methods should be a formal appraisal or a comparative market analysis (CMA) prepared by a qualified real estate expert who has physically evaluated the property.
We’re here to help with either, should you need it.
Joe Gordon
Broker / Owner / Divorce Real Estate Expert
801-577-6304