Zillow computes this figure by taking zillions of data
points much of this data is public and entering them into a formula. This
formula is built using what Zillow statisticians call "a proprietary algorithm"
big words for "secret formula." Currently, Zillow calculates a Zestimate® for
more than 48 million homes. Zillow is adding data all the time and in the coming
months they expect to add Zestimates® for many more
homes in the U.S.
What's in this formula?
One eye of newt Actually, it's less wizardry than
mathematics. When Zillow's statisticians developed the model to
determine home values, they explored how homes in certain
areas were similar (i.e., number of bedrooms and baths, and
a myriad of other details) and then looked at the
relationships between actual sale prices and those home
details. These relationships form a pattern, and they used
that pattern to develop a model to come up with a market
value for a home.
Is that all there is to it?
That's oversimplifying something that is incredibly robust
and sophisticated, but it's the basics. Hundreds of home
details feed into the formula and the home characteristics
are given different weights according to their influence in
a given geography and over a specific period of time. And,
because the details are always changing, the Zestimate® is
extremely timely it indicates the value of a home based on
the most recent data available in an area. We receive new
data and update the Zestimate® regularly to capture new sales
in a neighborhood. However, there is a delay between when
the county is notified of a transaction and when we find out
about it. We might not know for some time about the sale of
that house down the street from you that happened last week.
Why do I see home values for the past?
Zillow not only has Zestimates® for homes now, they have used
massive computing cycles to go back in time to generate
historic Zestimates® as well. Sound hard? It is, but it's
critical because it allows you to see how a home (or an
area) has appreciated in value over the years. You can see a
home's appreciation in a chart that looks just like a stock
table. Your home is, after all, a major asset in your
overall portfolio.
My Zestimate® is too low or too high. What gives?
The Zestimate® is really a starting point in figuring out the
true value of a house. A variety of things can affect the
accuracy of the Zestimate®. For example, the number of
transactions in a geographic area affects how much we know
about prevailing market values of homes there. The more
transactions, the more data and the more accurate the
Zestimate® will be. Also, we use public data for house
attributes, and some areas report more data than others. The
more attributes we know about homes in an area (including
yours), the better the Zestimate®. To correct for this, we
offer a tool called My Estimator that allows you to adjust
the Zestimate® according to specifics about a home.
How accurate is it overall?
Zillow data shows that the majority of our Zestimate® home
valuations are within 10% of the selling price of the home.
Of course, to a certain extent this depends on the accuracy
of the home data we receive; see our Data Coverage and
Zestimate® Accuracy table. (You can refine the Zestimate®
using the "My Estimator" tool, adding things you may know
about but we don't, such as remodeling information.) When it
comes to unique homes (e.g., luxury mansions, unusual
designs) we are less accurate in our Zestimates®.
Who calculates the Zestimate® and how do they do it?
Zillow doesn't have homing pigeons flying from land parcel to land
parcel to come up with the Zestimate® for a house, but they DO
have statisticians who work all day and some nights with
a huge amount of data. They live and breathe valuation
models and tweak algorithms to get us closer to actual
market value.
What's the Value Range?
The Value Range (the numbers below your Zestimate®) shows how
much we know about your home. The bigger the range, the less
data went into developing your Zestimate® and the less
certain we are about the worth of the home. The smaller the
range, the more accurate the Zestimate® because we have lots
of information to go on.
But you don't know about my granite kitchen counter and my
river view!
It's true, we've never been to your house, never seen your
expertise with colors and landscaping. Only you know those
things. So we've given you a way to consider them in
calculating a home's value with the My Estimator tool. Enter
an address for any home, then click on "Create an Estimate."
My Estimator will walk you through the steps to adjust your
valuation.
Is a Zestimate® an appraisal?
The Zestimate® is not an appraisal and you won't be able to
use it in place of an appraisal, though you can certainly
share it with real estate professionals. It is an estimate
of the worth of a house today, given the data we have
available. Zillow.com does not offer the Zestimate® as the
basis of any specific real-estate-related financial
transaction. Our data sources may be incomplete or
incorrect; also, we have not physically inspected a specific
home. Remember, the Zestimate® is a starting point and does
not consider all the market intricacies that can determine
the actual price a house will sell for, such as entertaining
offers, negotiating, closing costs, timing, etc.
Can I use the Zestimate® to get a loan?
No, you can't. To get a federally guaranteed loan, a law
called FIRREA (the Federal Institutions Reform, Recovery and
Enforcement Act) requires an appraisal from a professional
appraiser. The Zestimate® is our estimate of fair market
value, a starting point for home buyers and sellers and
anyone just plain interested in the value of houses. You can
use it in negotiating, in judging market trends, and in
calculating all sorts of things for your personal purposes.
But, if you needed a loan or help in understanding the ins
and outs of financing, please visit our Finance section.
Where does all the data come from? How can you know all this
stuff?
The data believe it or not is public. What? You've never
seen it? That's because it is hard to find and hidden in
multiple sources. We've done the legwork for you by getting
huge amounts of data from many sources and creating
something unique that the public sources don't provide a
Zestimate® of your home based on the public data.
