Zillow has a home valuation model called Zestimate where it is Zillow’s estimate of market value of a home. To estimate it, public, MLS, and user-submitted data are incorporated and also it takes into account some other things such as home location, facts, and market trends. How does Zillow calculate Zestimate? Let’s find out how Zillow calculates it.
According to the Zillow site, Zillow uses a sophisticated neural network-based model to calculate a Zestimate. In this model, data from county and tax assessor records and direct feeds from hundreds of a lot of listing services and brokerages are incorporated.
What are neural networks? Those are the systems of artificial intelligence that imitate the way the human brain works. They have the ability to map millions of data points efficiently where they will draw connections between inputs and use the relationships that are formed to predict or produce an output. In the algorithm of Zestimate, home facts, housing market trends, location and home values are correlated by the neural network model.
Here are the other things that are incorporated by Zestimate:
- The characteristics of a home such as location, square footage, or the number of bathrooms.
- On-market data such as description, listing price, days on the market, and comparable homes in the area.
- Off-market data such as prior sales, tax assessments, and other publicly available records.
- Market trends such as seasonal changes in demand.
As explained on the Zillow site, Zestimate home valuations are published by Zillow for over 104 million homes across the country.
Is Zestimate Accurate?
You may wonder whether Zestimate is accurate or not. To get an accurate Zestimate, complete data needs to be gathered. It is because the more data available, the more accurate the Zestimate is. The accuracy of Zestimate depends on the availability of data in a home’s area such as the number of bedrooms, square footage, etc. Not all homes have this kind of information. Some homes have, and some others do not. So, it affects the accuracy of the Zestimate value of a home. On the Zillow site, it is also explained that the nationwide median error rate for the Zestimate for on-market homes is 2.4%. Meanwhile, a median error rate for the Zestimate for off-market homes is 7.49%.
When My Zestimate is too Low or too High
The Zestimate’s accuracy is also affected by the amount of data that is available in Zillow for your home and homes in your area. One of the data is the amount of demand in your area for homes. Since the amount of data can affect a Zestimate, it is important for you to update your home facts if you find that the data are wrong or not complete.
If you want to get the most accurate Zestimate, it is better for you to report any home updates to your local tax assessor so that any additions, updates, and remodels will be reflected in the Zestimate.
You also have to make sure that your tax history and price history are also accurate on Zillow. You are able to inform Zillow, if you find that the data are missing or wrong.
If you have changed your home facts, the updates to your home facts will be factored to the Zestimate. However, you need to note that if the updates are not important enough to affect the value of the home such as paint colors, your Zestimate may not change. If the updates are important, your Zestimate will change and for your information Zestimates for all homes usually update several times per week. However, sometimes, it may be interrupted by algorithmic changes or new analytical features. So, who calculates the Zestimate? Because the Zestimate is an automated valuation model, it is calculated by a software process. So, if you think that someone can tamper with your home’s Zestimate, they cannot do that because it is impossible for someone to manually change the Zestimate for a specific property.
When you change or update the information about your home, the thing that you need to note is that it does not guarantee that it can increase the value of Zestimate, but it will increase the accuracy of Zestimate.