Zillow is putting their money where their Zestimate is, at least to a point.
The “Zestimate,” Zillow’s catchy (and soapy) name for estimated home values, will sometimes be used as the initial offer Zillow plans to pay to purchase a home, the company said on Thursday.
Zillow’s own estimated home value is to guide the company on a “limited subset of homes” in 20 markets. The largest of these are Los Angeles, Houston and Phoenix.
The firm’s announcement is an intriguing turn, because it folds up two company priorities into one – boosting consumer faith in the Zestimate, and highlighting Zillow Offers, the company’s instant homebuying, or ibuying, platform.
Even setting aside the various lawsuits that it has spurred, the Zestimate has had bumpy a 15-year journey, such as when former CEO Spencer Rascoff sold his Seattle home for 40 percent below its estimate (Rascoff would continue his seeming battle against the Zestimate, listing an L.A. home last year at $7 million more than its Zestimated price.)
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In response to a lawsuit over the accuracy of the Zestimate, Zillow in 2017 said the tool was within 5% of the sale price 53.9% of the time, within 10% 75.6% and within 20% nearly 90% of the time.
Still, the Seattle-based firm responded with efforts like computer vision to analyze aerial photos of a home, which followed a public competition, complete with $1 million prize, to improve the Zestimate.
Zillow Offers, meanwhile, came into focus in 2018 when Rich Barton stepped back into the CEO chair. In 2020, the business line accounted for the majority of the company’s revenue and expenses.
Zillow Offers is currently in 25 markets. Though the Zestimate may now dictate an initial offer, a final offer is predicated on a company representative actually visiting the home.
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