Zillow Group is now using its well-known Zestimate home value estimation tool to make cash offers on homes. It’s part of the company’s push to become a central hub for people looking to sell their home.
The feature is available for qualifying homes in 20 markets sold via Zillow Offers, the company’s home-buying and selling “iBuyer” service.
The Zestimate crunches various public records data and uses AI to come up with a price. It has improved over the years and now has a median error rate for on-market homes of 1.9%.
We’re now a small, but important step closer to realizing the Big, Hairy, Audacious Goal (BHAG) we set 15 years ago, of putting a real price on every rooftop and enabling home shoppers to magically fly over neighborhoods and see those prices.
Zillow launched the Zestimate in 2006. It marked the first time that homeowners gained access to estimated home values — data that was previously only available to real estate agents, appraisers and mortgage lenders.
Some have criticized the tool over the years. A group of homeowners in Illinois sued Zillow in 2017, alleging that the Zestimate tool is often inaccurate and difficult to get changed, and that Zillow markets it as roughly equivalent to an appraisal. The homeowners argued that the tool undervalued their homes and made it harder for them to sell. A federal appeals court sided with Zillow in the lawsuit.
Zillow CEO Rich Barton called the Zestimate “very provocative and personal and a little voyeuristic” in a 2016 GeekWire interview discussing how the company came up with the tool.
Zillow is using its growing Zillow Offers service as part of the company’s new focus on the end-to-end home-buying and selling experience. Zillow stopped Zillow Offers as the COVID-19 outbreak began but the business is now active in all 25 markets.
The company is reorganizing its structure to focus more on a customer’s holistic needs — they may need an agent, then a mortgage, then a Zillow Offers bid to sell their home, for example.
Barton alluded to the “bundled seamless transaction” on the company’s fourth quarter earnings call with analysts last week.
“The world is going to one click — why not real estate? That’s where we’re headed,” Barton said. “The fact that we have invested in every one of these ancillary services and now can begin to stitch them together in a way that a lot of the folks who provide point solutions can’t or struggle with — this is a big strategic bet.”
Barton added: “We’re really excited by the early signals that we’re seeing in an integrated bundled offering. It just makes so much sense.”
Zillow last week beat analyst estimates for its fourth quarter earnings. The company is benefiting from a strong U.S. housing market that gained nearly $2.5 trillion in value last year, the most since 2005, according to a Zillow analysis.
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News – Zillow will use its Zestimate tool to make cash offers for home-buying service