A Study on the ZestimateⓇ

Though we are in the midst of an AI boom, home valuation algorithms are nothing new. Zillow has been using the ZestimateⓇ tool for years to give consumers an idea of home values in a market with an increasingly “do it yourself” mindset. There are many ways to determine home value, including the price-per-square-foot model, a percentage-of-assessed-value approach based on market dynamics, and comparable sales. The latter is the most commonly used, especially in Nantucket’s market, where unique property features are often not fully understood by consumers (cost of construction, historic features, and zoning and environmental implications, to name a few). Further, the ZestimateⓇ often corrects significantly once a property hits the market, which further illustrates the margin of error. Zillow claims to have a 7% margin of error for off-market homes, which translates into almost a quarter of a million dollars on Nantucket’s $3,500,000 median home price as of December 1, 2025.

At the end of the day, no seller wants to leave money on the table, and no buyer wants to feel like they overpaid. With so much technology at our fingertips these days, consumers are spending significant time researching home values, especially in dreamy vacation destinations like Nantucket, where they are often concurrently browsing vacation rentals. However, automated valuation models can’t comprehend the nuances of our market, and thus do not perform well in high-value or luxury markets such as Nantucket. These models can only rely on tax assessors’ data and published sales data which they heavily base on square footage, simple bedroom and bathroom counts, and geographical location. They can’t accurately measure aspects such as construction quality, building materials, or historical details and significance. Furthermore, the assessed values are trailing by two years’ worth of data, so the market value as a percentage of assessed value is not a reliable metric in a declining or accelerating market.

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Another issue with these valuation algorithms is that so much of their integrity relies on averages, but in our market, sale prices in 2025 ranged from $284,000 to $37,750,000. With Zillow’s 7% margin of error for off-market homes, that is a $19,880 miss on the low end to a $2,642,500 miss on the high end. Zillow claims a 1.83% margin of error for on-market homes, but this doesn’t say much because they adjust their Zestimates based on a newly posted sale price (or price change). They naturally rely on broker pricing strategies, which is evident in the marked changes of the Zestimate once a property hits the market. For a property that is sold frequently, the Zestimate may be more accurate, but that is irrelevant in a market like Nantucket, where the turnover rate is lower than the national average. A house that last sold in the early 2000s is not even close to the value it has today, due to our rapid growth and the highly accelerated post-pandemic market. In short, no algorithm can replace the intimate knowledge that we have of the Nantucket real estate market.

For more Nantucket stories visit our blog at Fisher Real Estate.