Whenever I read a post about Zillow there are inevitability comments that sound like something from Goldilocksand The Three Bears fairy tail- My Zestimate is too high, My Zestimate is too low, My Zestimate is just right....
My answer has always been the same, it is simply a starting point and is no way an appraisal. It is something that attracts users to the site and creates a massive and dynamic audience for you then to market to, whether that be posting your listings for free or participating in a Discussion.
We will never be 100% accurate, we know this. We obviously haven't walked through the house or looked at comps with a human eye- that is why you hire a professional. Zillow is actually one of the few sites that is completely transparent about just how accurate we are, down to a local level. There is a link at the bottom of our homepagewhere you can get this information. If you are an Agent that comes up against Zestimates a lot in listing presentations, I highly recommend you print the accuracy chart and use it to your advantage.
But the question still remains, how exactly do we come up with that Zestimate? And furthermore, what are we doing to make it better?
The most significant factor that impacts how the Zestimate accuracy how much data is availablethrough your local county and the frequency in which they update this information. All of this information is then pumped into a complex formula. When our statisticians developed the model to determine home values, they explored how homes in certain areas were similar (i.e., number of bedrooms and baths, and a myriad of other details) and then looked at the relationships between actual sale prices and those home details. These relationships form a pattern, and they used that pattern to develop a model to estimate a market value for a home. If you want even more information about what a Zestimate is, I invite you to visit the 'What is a Zestimate Value" page on the site.
What are we doing to improve on accuracy? We recently added a number of new data sources(all done behind-the-scenes), on both on local and national levels. We also made a dramatic change to the way Zestimates are calculated by increasing the number of statistical models that are used in determining the number by 20 times! For example, the way a Zestimate is calculated in CA (you lucky Prop 13 people!) is not looked at the same as a home in IA, verse the way a home is looked at in a non-disclosure state like Texas. Not only can these models differentiate between states and cities, but they are now looking more closely at various areas within a specific city.
We now take into account homeowner-added facts when calculating the Zestimates. To date over 1,000,000 homeowners have edited something about their home! Doing all this immediately resulted in a 12% improvement in Zestimate accuracy nationwide.
I want to note one final change on the site that we made a few weeks ago. We used to display the Zestimate at the top of each home's page, right next to the For Sale price. Based on the feedback from MANY agents, we changed the layout of the home detail page to push your information and the home's information to the top of the page. We removed the Zestimate from the title of the home, so that your For Sale price is the only number prominently displayed at the top, and demoted the Zestimate below the fold of the page. This way we are drawing the most attention to the number that came from a professional, verses a computer.
Hopefully this will give you a little insight as to why the numbers are what they are. It is these Zestimates, and all the other functionality on Zillow, that are bringing MILLIONS of people to the site every day. As an real estate agent, this is the asset of Zillow that can be very valuable to you- the real people that you can now get your message out in front of.
At the end of the day, the consumer still needs a professional to help determine an asking price that is JUST RIGHT!
(I am not exactly sure what "porridge is??)