Few things have impacted the way we navigate the home buying and selling process over the past several years like Zillow and the Zestimate in particular.
The digital real estate company’s property appraisal model has become something of a gospel in the market as millions rely on appraisal to judge property value. Zillow has data for more than 110 million US households and publishes estimates for 104 million of them. The Zestimate uses real estate records, data from multiple listing services and data submitted by users to determine a home’s value, the company says, but it should not be used in place of a formal appraisal.
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At your service. Or not. In some condos, you don’t get what you pay for.
When the tool was first launched in 2006, it drew so much traffic to the site that it crashed. Despite its popularity, professional reviewers have questioned its accuracy for years.
Because the Zestimate relies on data rather than personal tours, it sometimes misses the mark on home valuation factors not found in the data. It’s also less reliable in cities where property values can vary from street to street. In 2016, Zillow’s then-CEO Spencer Rascoff inadvertently highlighted these issues when he sold his own home for 40 percent less than his Zestimate.
Zillow has said it is constantly working to improve its model so the millions who rely on the Zestimate can be confident in the estimate they receive. In 2017, the company even went so far as hosting a $1 million contest for data scientists to improve their formula. According to Zillow, the statewide mean failure rate for the Zestimate is currently 3.2% for market homes and 7.52% for non-market homes.
“Homeowners are so passionate about their homes and tracking the value of their homes,” Stan Humphries, the company’s chief analytics officer, said in a statement about the competition. “The Zestimate is important, and that’s why we never rest on making it even more precise.”
We want to know: What do you think of the Zestimate? Do you make real estate decisions based on Zillow’s estimates or hate the impact Zillow has on the market?
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