Where Does Your Zillow "Zestimate" Come From? Here's What to Know
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Zillow surfers and real estate listing lurkers alike know one of the online marketplace’s standout features is the Zestimate. This amount is displayed just below the main listing price, and Zillow produces more than 160 million of them for homes across the United States and Canada. It can be useful to refer to the Zestimate to see how close it is to the listed price—but how, exactly, does the company come up with these ballpark price tags?
If you’re eager to know more about the data that drives them, how accurate they really are, and if you can influence this number, read on.
First, What Is a Zestimate?
A Zestimate is the name of Zillow’s home valuation tool. The way it works is that an algorithm churns out an estimate of a home’s market value based on “data from public property records, tax records, recent home sales in the area, and user-submitted information,” according to Zillow.
What Factors Determine Your Zestimate?
Similar to an appraisal, the Zestimate takes into account all of the home details you consider in your own house hunt, including square footage, location, and the number of beds and baths. Homeowners can actually claim their home and edit facts about the property on Zillow to maintain accuracy.
Then there’s the on-market data. That takes into account the listing price, home description, and total of days on the market, and compares all of that to other homes in the same area. On the flip side, it sources publicly available tax assessments and prior sales in what it categorizes as “off-market data.”
Of course, changes in demand within the market also affect a Zestimate outcome.
How Accurate Are Zestimates?
No estimated home value is perfect, and Zestimates are only as accurate as the data behind them. According to Zillow, “the nationwide median error rate for the Zestimate for on-market homes is 2.4 percent, while the Zestimate for off-market homes has a median error rate of 7.49 percent.”
A Zestimate’s accuracy can vary based on where you live because some regions have more detailed home information readily available than others. Other factors that can lead to inaccuracies are mistakes in major figures like a comparable home’s sale price record not reflecting the right number.
When a homeowner makes a serious upgrade to a property, like a kitchen makeover or an additional bedroom, that may increase the value of the home, it’s not always taken into consideration by Zillow. Those updates can only be reflected in the final figure if you report them to your local property tax authority and they add that information to the public database and record. So, if you want your Zestimate to read as accurately as possible, it's important to stay on top of these filings.
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