I always tell them that it is a computer program that looks at all the facts and then applies those facts to every home in a given area.  Unfortunately, the computer has not been in the houses and doesn't know the condition of the homes and all the other factors that go into a true market price for a house.  If that doesn't work, go into your MLS to some of the pending listings and make note of what the Zestimates are.  Then when they close compare the Zestimates to the actual purchase prices.  That should speak the loudest.

Karen - I show them the facts. I will pull comps of recent sales, and compare that information to the Zestimate. I will also let my clients know that Zillow has never seen the inside, nor outside of any of these homes they are placing a value on, and they do not track any upgrades or remodeling.

Show them the actuals from mls.

I explain that they are algorithms and cannot take the place of a person seeing certain features, layout or upgrades in a home. In addition I like to show the home seller that we are looking into the future as to what the property can sell for in 30, 60, 90, 120 days. Those could be very different numbers.

Karen,

Did Zestimate knock on your door and see your home?  How do they know? The worst story I have ever heard was of a couple back east who bought a farmhouse with 10 acres for $700,000 tear down, and built a barn for horses, a 10,000 sqaure foot home, a 3000 square foot guesthouse, pool, tennis court etc.  Guess what the Zestimate was $700,000?  They interviewed several agents to decide upon a price, and one of the agents used the Zestimate as the final price...the property was worth somewhere between 6 and 7 million...A

I like all those responses, and I will add just one more. I tell them that the "market" determines the sale price, not an algorithm. 

You have to explain why it's not accurate and show them. When I do that, the arguments go away.

Zillow actually admits their zestimates are just estimates based on info pulled from public records. Many other companies do the same thing to come up with an estimate of value. They are estimates. They have no way of knowing if owner just finished the basement, added a patio or deck, just installed new 40 year shingles, had a new fireplace built, added an outside kitchen, replaced all the carpet with hardwood flooring, etc, etc.

I tell them it's a plus/minus 20%, 60% of the time.

It's easy to explain if you live in Texas. We are a non-disclosure state so the sold information is not available for Zillow. They are off anywhere from 20 - 35% because they are not privy to the sold data.

Use the Zillow AVM and other AVM from other sites.  It shows the disparity between diff arythhums and demonstrates how u reliable they are.

I show them zestimates in the area vs. recent sales prices. That usually cures them with a quickness.

We have no choice, but to explain it to them....Just to straighten out their thinking.

I let them know this is only an estimate and does not take into specific upgrades a given home may have.  While this is a place to start,  there is no substitution for personally seeing the subject house and researching the actual condition of the comparable houses.

Actually, the Zestimate is tightening up. In Oklahoma County the overall error is about 7% for most listings. If you take the 97% to 98% of the listed price sale on the MLS then you are down to about 5%, then when you see that is from the last listed price which is usually at least 5% from the original list price then you have the same AVM estimate as what REALTORS® are doing in reality. Looking at Core Logic and RPR the way their AVMs work is similar except they do a range which can be very wide. The thing is to understand that an AVM is a starting point, not absolute value. I think we get too caught up with this part of Zillow when we should be having real fears about what else they have been building towards.

It takes a lot of supporting evidence like others have mentioned here, but for those who really believe, they will need to learn the hard way.

I tell them that there are a lot of nuances in every local market that a website does not factor into their extimate.

Zestimates are statistical compilations of sales prices. They do NOT take into account any unique features of a home, including but not limited to: views, upgrades, orientation, natural light, and condition of home. If a homeowner spent $100,000 in upgrades, it still would not be reflected in the zestimate.

I have a copy of the CEo's interview where he says  point blank that they are wrong  by up to 20% and more most of the time.   I show that report and it makes a big difference

I refer them to the numerous articles in Washington Post, New York Times, Wall Street Journal that all say 'zestimates' aren't accurate.

I also explain to them that Zillow, Trulia et al are advertising websites that are free to the public because agents pay fees - that's how they're monetized. 

Then I show them the real data.

I usually tell my sellers or buyers zestimates are estimates and not an indepth market analysis.

I love this question from clients.   Let's pull up your house....hmm your home is "worth" $1,000,000 but let's look closer that can range from $850,000 to $1,275,000.    Oh and look at the some of the "comps" they are using --- what --- that dump around the corner that sold three years ago.

Point made.   

I like to say that it is a starting point...but then every REal Estate site will also have their own estimates...some zestimates have been "overall" accurate but not neighborhood specific...then most people get it-great post

I simply tell client's that it's not accurate. I let them know that these websites pull from databases that aren't up to date. I normally have no issue with it. 

Thinking the Zestimates had an accuracy percentage right on their site to start, plus providing the homeowner with ACCURATE solds/UC and Actives.  

Karen Fiddler, Broker/Owner Zestimates go away when you can prove your data with an accurate CMA.

I simply inform them that New Mexico is a no disclosure state. There is NO WAY Z can give an accurate number.

I LOVE ZESTIMATES!

For several reasons.

1. It reveals the world in which the client lives (what they believe)
2. It is easy to expose the lie
3. It provides the platform I need to establish my value.

Historic data will reveal the accuracy of the Zestimate. Simply look at what has sold in your area in the mls and pull up the Z. It will still be miles away from reality. 

Now, you tell the seller, "We'll do MUCH better than that!" And to the buyer, "DO you really want to buy a house?"

Did you notice only BUYERS '"BELIEVE."

In the CIS Score Report the z and JMV and BofA value are posted along side the score. "Which number do you want to believe?" you ask the client. One has a proven 4% accuracy, while the others accuracy is buried in double speak and the most impressive exhibition of Vanity Metrics ever seen.

I simply tell them that Zillow and their "zestimates" suck.  

The otehrs have given you good answers. 

 Good Tuesday morning Karen. If you want to put some zest in your life, just go out and visit the big 'Z'.

Good morning Karen. On the mortgage side, it is less of a problem compared to the real estate side. I let people know that these numbers can't be trusted.

I don't.  Zillow only applies in the USA.

I wrote a blog piece about it a while ago, so I refer people to that sometimes, but my favorite response came from a friend who's husband works for them. It's a ZEstimate, not a ZAppraisal. 

Karen,
I have had the best luck comparing them to the mass computerized tax valuations. Most people accept that tax valuations aren’t very accurate so if they understand the same methodology is being used that solves the problem.

Simple Karen, it is computer generated and cannot do the work of a human. Also did Zillow see the home? I think not.

My problem are assets managers who heavily rely on zestimates. That is kind of silly and very inconvenient when the house costs 20-30% is less than they think. 

its an average of a average of a mean of a number... the computer doesnt know YOUR neighborhood

I give them a spread sheet with recent hard data <90 days,. < 0.5 miles, gla+/-10%, age+/- 10 yrs and lot size.   I summaried the avg and bingo, photos.

I tell the clients that is what the apperaiser uses. They quickly shut up.

FYI Redfin recently removed Zestimates and Trulia got its version of the Testimates.    

The only way to talk about accuracy is to show them just how off those Z's are.

I tell them that Zillow is a tool and sometimes halfway decent - a huge spec home developement with the same repeating 3 or 4 floor plans all built within the same few years - sometimes Zestimates are ok. And sometimes for general info and trends Zillow serves a purpose.  However, like Don said, it's computer program generated "core logic" type estimate that doesn't factor in condition and the other factors. These other factors are things like a steep driveway vs. a flat driveway, a home that backs up to a busy road vs a home that backs up to a greenbelt of busy street, whether or not the seller's were smokers, whether or not there are pet smells - things that effect value and require judgement that a computer program can't do.

Karen, I am answering this before I read any of the 53 other answers.  

My answer is 'Zestimates are like zest soap.  Kind of a slippery slope to stand on." 

I tell them that web site is not privvy to all real estate related sales, therefore making them innacurate and then give them information based off the local MLS.

I explain that zillow doesn't actually go into the properties

Some of the initial advice that we should offer is that Zestimates are not always accurate.

I tell people everyday that these can be all over the board and not to get caught up in what they show ....I wish they were more accurate!

Great question!

My response is that they are accurate as often as they are not.  There is always a great example that can demonstrate the point - start with the general comment and then provide the facts....they may not get it the first go around, but perhaps after losing a few they will get it.

It's easy in Texas.  Since our deeds don't have sale prices on them, Zillow is no more than a WAG (wild well you know guess). 

I might show them my old house hhaha:  Zillow:  1.2m

Reality:  200g's with a push.

And there you have it.

It is actually fairly accurate in some area's.

Make it a Great Day.

I explain that it is a computer program that looks at numbers but has no area knowledge to know where trailers stop and million dollar homes begin. 

I finally wrote an article about it for About.com and I send them the link. Half the time they don't even realize I wrote the article, they just accept the authority. That's what I do with a lot of stuff that requires lengthy or complicated explanations. I write an article or a blog and I send the link.

I show them RPR  and tell them that I can rely on that data.  Since Zillow in the Greater Boston is by their own admission only reliable within 80% of value 90% of the time.

Karen I come with facts and data, Zestimate is easy to beat if you have your comps and knowledge of the area in your toolbox,E