Zillow Updates its Zestimates Accuracy
Zillow has updated its Zestimates of home values to improve its accuracy. The popular online real estate portal made two major changes to their system. In addition to improving how Zestimates are calculated, they also changed how users can report the accuracy/inaccuracy of their value estimates.
photo/ tkoch
Zillow has also updated its algorithm to detect homes with granite and quartz countertops, hardwood floors, and large windows. The algorithm takes these “fancy” features into consideration when doing pricing estimates for homes.
According to Zillow, the updated feature can “incorporate the value of features like updated bathroom fixtures, fireplaces, and remodeled kitchens” into the Zestimate of a home.
The new update also includes real-time data for homes that are listed for sale, including the number of days the property has been on the market and the listing prices.
Zillow uses a combination of information to calculate its Zestimates, including listing data, property records and sales of other similar homes.
Every few years, Zillow makes major improvements in how they calculate their Zestimates.
In addition to the update, Zillow has also changed the way they report the accuracy of their Zestimates. Three years ago, Zillow’s national median error was 6.7%, and last year, it was 4.6%. Now, their median error is at 7.7% for homes not listed for sale, and just 1.9% for homes that are listed for sale. The accuracy improves when a home is up put for sale because photos and information about the home are added to Zillow’s database.
About half of all Zestimates now fall within 2% of the home’s eventual sales price.
The upgraded algorithm is part of the company’s plan to ramp up its iBuying business.
An iBuyer is a company that uses technology to make an instant offer on a home. The idea is that the company estimates the value of a home, and makes an offer. If accepted, the company will take on the burden of owning the home, marketing it and reselling it. Sellers enjoy the benefits of an all-cash offer and also have more control over the timing of their move.
Zillow has already ventured into this industry via its Zillow Offer service. Now, homeowners can sell their homes directly to Zillow without having to deal with showings, staging and waiting months to close. Closing dates are flexible, so homeowners are able to move when it’s most convenient for them.
The updates to Zestimates will ultimately bolster Zillow Offer, making it more enticing for homeowners to sell their homes directly to Zillow.
Author: Jacob Maslow
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