Unsure about the accuracy of some Zestimates?
Take a second look at those valuations tomorrow: they may look more realistic than before, particularly if they’re new homes.
Zillow is rolling out an update to the Zestimate’s automated valuation model (AVM) that will increase the accuracy of Zestimates nationwide, including in 96 of the 100 largest U.S. counties, according to the listing portal.
The tweaks will cut the Zestimate’s national “median error rate” to 6 percent from 8 percent, meaning that half of Zestimates nationwide will be within 6 percent of a home’s sales price and half will be off by more than 6 percent, according to Zillow.
Zillow has more than halved the national median error rate of the Zestimate since the Zestimate’s debut in 2006. At that time, the Zestimate had a national median error rate of 13.6.
Zestimate’s median error rates vary widely at a local level.
The update to the Zestimate AVM enables the AVM to make better decisions about which algorithms to use to value properties depending on a home’s characteristics and location.
New sub-AVM
One key component of the update is the introduction of a new sub-AVM designed specifically to value new-construction homes. Another is the addition of more computing muscle to help the AVM process home value data faster and reduce the likelihood that Zestimates will overreact to “outliers.”
“For example, a nearby home with unusual features that sold for well above or below its value will not have as great of an effect on nearby Zestimates,” Zillow said in an emailed statement.
Zillow said that Zestimates remain a “great starting point for determining the value of a home” but that “ultimately a home is worth what someone will pay for it.” The listing portal encourages consumers to consult a real estate agent to “determine and fine tune a home’s price.”
One way agents can point out the potential weaknesses of Zestimates is to mention that Zillow CEO Spencer Rascoff sold a property for 40 percent less than its Zestimate at the time.
Zestimates are calculated based on public county and tax assessor data, including public property sales records, and data obtained through direct listing feeds from hundreds of multiple listing services and brokerages, Zillow says.
“Additionally, Zillow users have updated home facts on more than 50 million homes, enhancing Zillow’s living database of U.S. homes and adding data unavailable anywhere else,” Zillow said.
