For years, the accuracy of Zillow’s Zestimate, the property value estimation tool that appears on every listing on Zillow, sometimes stood as a source of contention for real estate professionals and consumers alike.
But now, Zestimates are about to get way more accurate, according to an announcement from the online real estate giant.
Zillow announced Wednesday that it is about to launch an update to the algorithm that powers its Zestimates, which Zillow claims will improve the accuracy of the property value estimation tool across the country.
According to Zillow’s announcement, the update will cut the Zestimate’s national median error rate from 8% to 6%, meaning that half of all Zestimates will be within 6% of the selling price, and half will be off by more than 6%.
Additionally, Zillow said the Zestimate update, which will be rolled out Wednesday and Thursday, improves accuracy in 96 of the 100 largest counties in the U.S.
“Homes are a big investment, so if you own one, you're probably wondering what it's worth. That's why we created the Zestimate – to freely give consumers as much information as possible about the housing market and homes, so that they can make smart decisions when buying or selling,” said Stan Humphries, Zillow Group chief analytics officer and creator of the Zestimate.
“Since we launched the Zestimate 10 years ago, we have been continually working on making it even better,” Humphries continued. “With the additional statistical models and computing power behind today's update, we are able to provide consumers even better information about millions of homes, equipping them to make informed decisions when talking with a real estate profession about buying or selling.”
According to Zillow, the algorithm’s improved accuracy stems from a model specifically built to value new construction, as well as increased computing power that will allow Zillow to process more home value data faster.
Zillow states that it publishes Zestimates on more than 100 million homes across the country based on 7.5 million “statistical and machine learning models” that examine hundreds of data points on each individual home.
To calculate the Zestimate, Zillow states that it uses data from county and tax assessor records, and direct feeds from hundreds of multiple listing services and brokerages.
Additionally, Zillow users have updated home facts on more than 50 million homes, which Zillow claims provides data unavailable anywhere else.
Zillow cautions that most users won’t see a “dramatic change” to their Zestimate once the new change takes effect.
Zillow also states that Zestimates are a “great starting point” for determining the value of a home, but notes that ultimately a home is worth only what someone is willing to pay for it.
“Zillow encourages homebuyers and sellers to work with an experienced local real estate professional to determine and fine tune a home's best price,” Zillow states in its release.