There are several different ways to get home value calculations online. Many people start their research online for real estate and housing services, whether they plan on refinancing their mortgage, trying to get an idea of potential increased value after remodeling, or buying/selling a property.
One of the most popular places people go online to answer their home value questions is Zillow. While Zillow provides free real estate information, the most attractive feature on Zillow.com is their “Zestimate,” a program that instantly estimates a home’s value when website visitors type in the street address.
Below we examine Zillow’s “Zestimate” system of home value calculation.
Sale prices of homes are available to anyone as public information. Zillow has assembled massive amounts of public information on home prices that you, or anyone interested in home values, can find. The biggest difference between Zillow and you? Zillow knows where to find the information.
Once Zillow has assembled their massive database of public house value information, they put the data into a formula they personally created. The formula allegedly considers “zillions” of pieces of data. Zillions seems to be a bit of stretch, but Zillow’s “secret formula” considers certain home attributes differently based on things like climate and geographical area. For example, assuming all home statistics are equal, a three-bedroom home in Miami will likely have a higher Zestimate than a comparable three-bedroom home in Harrisburg, Pennsylvania.
Zillow also applies its Zestimate formula to a region as a way to establish a home value history, so Zestimate users can see appreciation/depreciation levels of an area and property over time.
The secret formula is constantly being tweaked as Zillow acquires new data about a location. Zillow’s Zestimate is reportedly applied to over 67 million homes in the U.S.
Zestimate’s are presented as a price based on a given value range. When you first look at a Zestimate, you will see a low and high value of a home, plus the actual Zestimate. The wider the value range on a home, the less data Zillow has on which to base its Zestimate. Similarly, the smaller a price range on a home, the more data Zillow has on a property. The accuracy of a Zestimate is entirely based on the amount of data Zillow has available about a home’s history and the local area.
Zillow claims that their data shows a Zestimate is typically within 10% of a home’s sale price. That said, Zillow’s calculations are completely unaware of all home remodeling and improvement projects without your input.
Also, the more unique your home, the less accurate your Zestimate.
For more information on home appraisals, please continue reading on the following page.
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