The real estate industry has changed a ton in the past two decades, especially when it comes to access to information and tools for both buyers and sellers of land, homes, and other property.
If you’ve done much with real estate in the past decade, you’re probably familiar with Zillow. Zillow started out as a public database of useful information about real estate, including historical value data and details about related real estate services. Zillow initially began as a database of information published on the business model of making revenue from advertising, but it has since grown into the most used resource for more than just information.
Real estate agents, home owners, renters, mortgage lenders, and many others who have any interest in real estate now use Zillow for lots of different purposes. Zillow now has over 100 million homes and properties in the United States listed in its database, and has recently (2018) expanded in to Canada as well.
Zillow is the largest real estate information portal on the internet, outpacing realtor.com, redfin.com, and trulia.com (which it acquired in 2015) to capture almost one-third of the real estate market.
Zestimate: Zillow’s Approach to Home Value Estimates
The most prominent aspect of Zillow’s information offering is its Zestimate calculation, which is its trademarked system for estimating the current and forecasted value of a piece of property based on historical data and other information Zillow has access to. Most of Zillow’s property listings have Zestimate values, except in markets where there is not sufficient information to make an accurate estimate.
Of course, even for properties where Zillow’s Zestimate does apply, the accuracy of that estimate is limited by several factors, including the privacy of data available because of government restrictions, the number of comparable homes and the size (population and number of homes) of the market, and other limitations.
How Accurate are Zillow’s Zestimate Evaluations?
Zillow has pages on their website dedicated to explaining how accurate their estimates are for each state where they have data.
I will include a link to each of those pages below, but first I will describe how Zestimates are made by Zillow.
Zestimates are created by pulling together public information and user-submitted data. For instance, county governments and cities throughout the country provide to the public varying degrees of information pertaining to activities (including home sales, building permits, etc.) that are attached to the various properties within their jurisdictions. In some areas, there is much less data available than others. For instance, in non-disclosure states (where the price a home was sold for is withheld from being recorded), the actual value of properties is much more difficult to determine.
Zillow publishes pages for each state that show, county by county, how accurate they feel their Zestimates are, and they even provide a download of statistical information that qualifies their estimates by comparing actual sales price data for known transactions with Zillow’s own Zestimate predictions.
Zestimate Accuracy Predictions for Each State
Click on the state name to follow the link to corresponding Zestimate accuracy predictions page on Zillow.
Zillow Tools for Home Buyers
Home buyers can use Zillow to shop for available homes (sort of like a countrywide multiple listing service – or MLS – similar to Realtor.com), where they can view information about the price history, estimated value history and other pertinent details about the home.
Often, because of its access to data sources nationally and locally, Zillow will have information about homes that doesn’t show up even on the listing agent’s (or his/her broker’s) website.
This data tends to be very useful for buyers, who are trying to get a feel for how any particular home’s price and features compares to other homes and to the market in general.
By setting up an account on Zillow, a home shopper can look at homes grouped for sale in a particular geographical area, save listings to their Zillow account, and share them with others. I often use Zillow to share homes I find interesting with my wife, and to refer back to listings that I don’t have time to check out in detail when I come across them initially.
While shopping for homes or properties, I often start with Zillow. Or, if I’ve found the property on another listing service, such as an obscure local real estate website, I’ll refer back to Zillow to get context about the property.
Zillow Tools for Home Sellers
Zillow is also useful for home sellers. Many sellers use Zillow’s Zestimate data to get a sense (or at least a kind of second opinion) of what price range makes sense for listing their home for sale.
Make Me Move
Zillow also has added a Make Me Move listing feature that allows homeowners to essentially use Zillow to test out selling their home, even without officially putting it up for sale. I’ve had friends use the Make Me Move feature successfully when they decided to move to a different part of the state to be closer to family. They weren’t completely committed to selling their home, because they had things to work out with employment and housing in the new location. They weren’t completely committed to moving. However, when someone offered them their Make Me Move price, which was higher than what they considered the market price to be, they jumped on the opportunity and sold the home that way, avoiding having to pay real estate commissions in the process.
When a homeowner has set up an active Make Me Move listing, visitors to Zillow can see that the home is potentially available at that price, and can make an offer on it. The Make Me Move listing contains most of the same information you’d see in a normal for sale listing, pictures of the home (though often not professionally done), and other pertinent details to help potential buyers make decisions about the property.
Listing a Home for Sale on Zillow
Homeowners can also list a home for sale using Zillow. Because of the amount of traffic Zillow receives, listing your home for sale on Zillow might be a good first step before listing with an agent if a homeowner feels comfortable handling the agent work, staging the home, taking professional pictures, executing a real estate purchase agreement, walking through disclosures, and doing other real estate sales activities himself.
Zillow Tools for Renters
For people who aren’t buying or selling their homes, Zillow also offers services to renters and those who are renting their homes. Zillow’s home rental services cover both sides of the renting equation: renters as well as landlord and property managers.
Zillow’s database of places for rent is comprised of information provided by third parties as well as from landlords and property managers themselves. Zillow aggregates rental information from places like HotPads.com, Rent.com and other online rental brokers. Landlords and property managers can also go directly through Zillow and list home for sale there.
Zillow’s tools for renters include handling the application process, online rental payments, and other resources that facilitate the interactions between tenants and rental managers.
Zillow for Real Estate Agents
Zillow’s real estate portal provides opportunities for real estate agents to list homes for sale, shop for homes for their clients that they might not be able to find elsewhere (or find information not readily available elsewhere), advertise their services and find new clients in other ways, network with other real estate professionals, and do research on their local market area as well as other areas throughout the country.
Zillow’s Premier Agent feature allows agents to be featured on the pages of homes listed in their market area. Leads are generated from people using those pages and sent to the real estate agents who are listed on those pages.
Zillow for Mortgage Companies and Lenders
Naturally, Zillow has its own home loan offering through Zillow Home Loans. Some portion of those who shop on Zillow prefer to use Zillow for financing as well.
Zillow also publishes profiles for lenders, including basic information provided by lenders who pay to post their company information on Zillow. Lender profiles include a section where Zillow users can review them. However, unlike a service like Yelp (which heavily moderates reviews to ensure objectivity), reviews on Zillow tend to be be highly manipulated by lenders.
Zillow serves as a source of leads for companies that provide home loans to customers.