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What Is a Zestimate? The Art of Gaming Zillow's Home Value Algorithm



What Is a Zestimate?


When Zillow introduced the Zestimate in 2006, it revolutionized the way homeowners and homebuyers alike viewed real estate. For the first time ever, consumers could quickly determine the estimated value of any home in the entire country with the few clicks of a mouse. 


In spite of Zillow's innovative approach to the once gregarious task of valuing a home, the Realtor community quickly turned on the tech giant criticizing their methodology. To be honest, much of this criticism was warranted. The original Zestimate only looked at objective features of the property, such as square footage, number of bedrooms, and lot size, while failing to take into account many of the nuances that make a house a home.


But the original Zestimate was not created as the be-all, end-all in home valuations. It was simply meant to be a quirky tool that would drive more traffic to Zillow's website. Over time, however, things began to change. Improvements in machine-learning coupled with a better understanding of data science have allowed Zillow to transform the Zestimate into a rather robust home valuation tool.


In 2019, Zillow awarded one million dollars to Team ChaNJestimate for developing a new Zestimate algorithm that claims to be 13% more accurate than the previous iteration. Zillow said last year that the Zestimate’s “error rate is now less than 2 percent, meaning half of all Zestimates fall within 2 percent of the home’s eventual sale price.”

While this isn't perfect, they are improving exponentially every year.

How Does Zillow Calculate My Zestimate?

While Zillow claims their algorithm is proprietary, there's one thing we know for certain - there are literally hundreds of variables that go into your home's Zestimate. Here are what we believe to be the top 10.


  1. Most recent sale price

  2. Recent sale prices of homes in the area

  3. Home size (square footage, bedrooms, bathrooms, and lot size)

  4. Amenities (appliances, fireplace, patio, etc)

  5. Structural remodel year

  6. Garage parking spaces

  7. Keywords in home description  

  8. View (water, park, etc)

  9. Year built

  10. Pictures (yes, these make a difference!)

Can I Influence My Zestimate? In short, the answer is yes. While Zillow is making it more and more difficult to manipulate Zestimates (and rightly so), there are still ways to skew your home's value in your favor. Please note, if you're planning to sell your home, it's extremely important that the data you submit to Zillow accurately reflects your home. Claiming you have 4,000 square feet when you only have 3,000 will certainly increase your Zestimate, but this is not an effective or ethical way to maximize your home value. Here are a few legitimate ways to bolster your Zestimate. 1) Submit Data Points

I can't emphasize enough how important data is. Zillow's Zestimate is calculated by an algorithm, meaning billions of data points go into a computer that (more or less) magically spits out a fairly accurate value for your home. It's therefore imperative the data for you have on Zillow be accurate. To update your home's data, first login into your Zillow account and claim your home. From there, you can edit many of the variables I mentioned above. Be sure to check every box that applies. If you have a dishwasher, make sure Zillow knows about it. If you finished your basement recently, check that box and update the square footage accordingly (this is a big one). 2) Strategically Select Keywords

Zillow announced last year that they now take your home's description into consideration. Similar to how keywords impact a website's ranking on Google, keywords can also influence your home's Zestimate. While the algorithm is constantly changing to provide a more accurate measure of a property's value, I generally find there are two types of phrases that Zillow really likes; updates and walkability. Newly renovated homes in walkable, trendy neighborhoods are all the rage and Zillow has picked up on this. If you research this topic online, you'll likely come across articles claiming that mentioning amenities such as steam showers or pet baths will drastically increase your Zestimate (and by drastically, I mean up to 25%). However, there is little evidence to support these claims. While it's true that Zestimates of homes with steam showers are, on average, 25% higher than Zestimates of their counterparts, this difference is not causal. Rather, steam showers are generally installed in luxury homes that are inherently worth more than your average home, hence the strong correlation. In sum, walkability and updates seem to be the big two to focus on. When you hire a Realtor, make sure you select one who is well-versed in the latest keyword trends so you can optimize your Zestimate as soon as you hit the market. I suspect keywords such as a home office or home gym will be on the rise in the near future. 3) Upload Photos

Believe it or not, Zillow now uses photos to determine your Zestimate. While their machine-learning is still in the early stages of development, and therefore (in my opinion) has a low impact on the Zestimate, I anticipate this feature will make it's way to the forefront in the very near future.  Stan Humphries, Zillow’s chief analytics officer and creator of the Zestimate, recently said, “The new Zestimate was inspired by the way the human brain interprets scenes, objects and images. It’s a big leap forward because it means the Zestimate can now understand not just a home’s facts and figures, but its quality and curb appeal.”


So what does this mean for you? The main takeaway I gather from this ever-evolving Zillow feature is that more photos are generally better (within reason). I find the optimal number of photos to be around 30. Enough for Zillow (and everyone else) to see your whole home without being too overwhelming. It's important that you include high-resolution photos of every room in your home, especially rooms featuring recent updates or renovations. I believe one of the main ways Zillow uses this photo tool, is by analyzing color schemes to favor homes that match current design trends. 

4) Patience


If you've taken the steps outlined above, all you can do now is to simply wait. Zillow doesn't update instantly. In fact, it can take up to a week for the changes to take effect. Be sure to keep this in mind when selling your home and ask your Realtor if they can help update your Zestimate prior to going on the market. To get top dollar, it's important your Zestimate is at its optimal level prior to going on the MLS.

Conclusion


While Zillow's Zestimate has it's shortcomings, it's absolutely here to stay, and every year, Zillow seems to roll out some new technology that makes the Zestimate ever more accurate. While it's never okay to misrepresent your home, there are honest ways to influence your Zestimate. First and foremost, be sure your home's objective info is accurate and complete. Second, use keywords in your home's description. And last, but not least, upload high-quality photos of your home. 

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OwnerLand Realty

commoncents614@gmail.com   |   614.706.1912

Columbus OH 43212

©2020 by Brandon Alfriend.
Common Cents is a real estate brand operated by Brandon Alfriend of OwnerLand Realty (broker).