Zillow is a Real Estate website with a variety of tools and information. Buyers use the website to shop homes for sale. Zillow also offers a “Zestimate” which is their computerized model that generates a home value for individual homes.

Since its inception, the Zestimate has attracted a lot of attention from critics who pointed out its inaccuracies. Zillow has never stated the Zestimate is perfect, but that it is a starting point for determining value. They made some major changes to their algorithm in the past year and have stated the national inaccuracy has been reduced from 8% to 6%. So how does the Zestimate fair locally here in Bozeman? In order to find out, I took a look at 2 months of home sales in Bozeman; March & April of 2017 and compared the actual sold price to the Zestimate.

During these 2 months, March & April of 2017, 133 single family homes sold in Bozeman, including areas inside and outside city limits, but not including Belgrade. Of those 133 sales, 57 were homes built in 2015 or newer, which Zillow would not yet have information for, so they were excluded. Quick side note, that is an interesting statistic on its own; Of the 133 homes sold in March & April, 57, or 43% were new construction.

Of the remaining 76 homes built in 2014 or prior to, I was able to find a Zestimate for 58 of the homes. Zillow either could not find the address or compute a Zestimate for the other 18 homes.

The inaccuracy of the Zestimate for those remaining 58 sales averaged 5.25%. At first glance, that doesn’t seem too bad. However, that average doesn’t take into account that sometimes the inaccuracy was high and sometimes it was low. Therefore, it could be more realistically viewed as a 10% inaccuracy. On a $400,000 home, 5.25% equates to a potential $21,000 swing in either direction, or ranging from $379,000 to $421,000.

Of the 58 Zestimates, 18 were high, and 40 were low, meaning Zillow estimated the value was higher than it actually sold for 31% of the time and lower than it actually sold for 69% of the time. 9 sales, or 16%, were more than 10% off.  The worst inaccuracy was 26%. The Zestimate was spot on for 1 sale and within 1% for 10 sales, or 17% of the 58.   

The data shows that while the Zestimate may be accurate some of the time, its inaccurate often enough. Buyers and sellers can use it as a starting point, but additional information is needed to really narrow down a value. Buyers and sellers should also know that Montana is a non-disclosure state, therefore there is not a publicly available database that compiles all the home sales as exists in many other states. People should be very wary of any online site that claims to have this information and should always look for the best information from trusted sources when making a large purchase or selling decision.  

I have also included recent sales data for the first 4 months of 2017. In addition to the 251 homes sold in during these 4 months, another 238 home sales are currently under contract or pending as of the date of writing.

The included data reflects sales of homes in the greater Bozeman area, including Four Corners, Gallatin Gateway, Bridger Canyon, and Bozeman city limits. The data includes home sales reported through the local Big Sky Country MLS, and does not include private party sales, Condominiums, or Townhouses.