We’ve all checked our Zestimate at one point or another or investigated the home values in our neighborhood. As the go-to tool for gaining insight into potential property values, Zillow’s Zestimates have become one of the most relied-upon resources for homeowners and real estate investors.

While not a replacement for an appraisal, the Zestimate can offer homeowners and investors a helpful starting point when gauging a property’s worth.  But with only an algorithm and impersonal data points to rely on, how close do these calculated figures land to a property’s true worth?

Let’s look honestly into how Zillow arrives at its famous Zestimates and clarify what kind of accuracy homeowners can expect from this calculation. Understanding the capabilities and limitations of the Zestimate tool enables homeowners to determine better when—and when not—to rely on this digital assessment of their home’s market value.