How Zillow calculates home values?

by vincenzo.murazik , in category: Real Estate Investing , a year ago

How Zillow calculates home values?

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1 answer


by keshawn , a year ago


Zillow uses a proprietary algorithm called the Zestimate to estimate the value of homes. The Zestimate takes into account various factors including public data, user-submitted data, and information from real estate agents.

Some of the key elements considered by Zillow's algorithm include:

  1. Property characteristics: Zillow looks at factors like the size, number of bedrooms and bathrooms, lot size, and other physical attributes of the property.
  2. Comparable properties: Zillow compares the target property with similar properties that have recently sold in the same area. By analyzing the sale prices of these comparable properties, Zillow derives an estimate for the target property.
  3. Location: The location of the property plays a significant role in determining its value. Factors such as proximity to amenities, schools, transportation, and the neighborhood's desirability are taken into consideration.
  4. Market conditions: Zillow's algorithm considers the current state of the real estate market at both the local and national levels. It takes into account trends in prices, demand, and supply, as well as economic factors that may impact home values.
  5. User-submitted data: Zillow also incorporates data provided by homeowners and real estate professionals who update information about a property on the website. However, user-submitted data is not the sole source for calculating values.

It's important to note that while Zillow's Zestimate can be a useful starting point for estimating a property's value, it may not always accurately reflect the true market value. Factors such as renovations, property condition, and unique characteristics may not be fully captured by the algorithm. Therefore, it's recommended to consult with a real estate professional or appraiser for a more accurate assessment of a home's value.