What is a Zestimate? How is it determined? How accurate is it?

By
Services for Real Estate Pros with Zillow

First of all, what is a Zestimate?  

A Zestimate is an estimated market value of a home on Zillow.com.  We have calculated Zestimates on every house back in history as far as we could get data.  Additionally, we let people refine their Zestimate via a tool called My Estimator, where they can factor things not reflected in our data, like a recent kitchen remodel or deck addition.  Homeowners can keep this information private, or publish it on the site for others to see.

How is this Zestimate number determined?

Our team of statisticians developed a proprietary algorithm designed to estimate the current value of a home. In short, it starts with data about the physical characteristics - number of bedrooms, baths, sq. footage, lot size- of all the homes in an area, obtained from public records.  We then look at the relationship between these physical characteristics and the sale prices of home in that area over time and right now.  We use these relationships to estimate the current value of an individual home.  

Zillow is constantly working feverishly to fill in data holes and add more information.  In the areas where we have data, all of it comes directly from county records.  We work with a number of third-party data providers nationwide to help us obtain all the relevant current and historic public data from various government agencies around the country.  We then combine that data into our master database, from which we use our proprietary process to derive a home's Zestimate. 

How accurate is Zillow?

Zillow is designed as a research tool - a first step to determine a home's value or a starting point when researching a particular home.  Ultimately, a home's sale price is determined by the buyer and seller. 

Nationwide, our median margin of error when compared against actual sales is 7.2%.  Not bad - but even better when you use our My Estimator tool.  Also, if you want to see how accurate we are in your local area, you can click on the See our accuracy and coverage in your area link on the home page.  For example in the St. Paul, MN area, our median margin of error is 6.5% and 68% of the homes in the area are within 10% of the asking price. 

This local chart is a good tool to have in your back pocket when explaining to buyers/sellers why there is a discrepancy between your price and Zillow's.  Again, updating the home's facts and letting us know about any improvements with the My Estimator tool can also help bring the two numbers closer together.  

 

 

 

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Anonymous
Mary

Does the zestimate consider the acreage/lot size a house sits on or just the size of the actual house?

May 19, 2009 06:57 AM #1
Rainmaker
182,040
Sara Bonert
Zillow - Atlanta, GA
Real Estate Internet Marketing

Yes, it definitely takes this into account.  Also, how much of an impact it has varies from area to area.  Actually, we released a video that talks about the Zestimate- check it out at http://www.zillow.com/blog/understanding-the-zestimate-video/2009/05/19/

May 19, 2009 07:05 AM #2
Anonymous
David L Dalman

Recreational property, such as lake front summer homes, seem to be priced much higher than their zestimates in our area.  (ie: zip codes 74044, 74467, 74365)  What kind of factors are used to value recreational property?

May 29, 2009 10:23 AM #3
Anonymous
Derek
I recently viewed a house whose public records list the home as much larger (approx. 30%) than the listed sq footage. How are the public records factored in to the estimate?
Nov 27, 2010 01:00 PM #4
Rainmaker
182,040
Sara Bonert
Zillow - Atlanta, GA
Real Estate Internet Marketing

Derek- Yes, sq footage and public records greatly figure into the calculations of the Zestimate. That is why in counties where the information published is frequent and rich, the Zestimates tend to be more accurate than in those that don't. However, here is something important to note:

When the listing goes on market, if in the agent's listing if we were to learn that the home has a different sq than what the county says, we will override the data used with the agent's information.  So if the county said it was 1000 sq ft and the agent said it was 1500 sq ft, we would use the agent's data. Then on the site, every Zestimate gets revisited and potentially recalculated three times a week.  So the next time the home was viewed by the system, it would see this increased number and recalculate.

Nov 29, 2010 05:21 AM #5
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Rainmaker
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Sara Bonert

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