Zillow Offering Cash for Homes Based on Value Estimation Tool

Zillow is inviting homeowners in certain markets to sell their homes at the valuations set within Zestimate.
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Zillow  (Z) - Get Report said Thursday that it was offering to buy homes for cash in 20 cities around the country based on its Zestimate home-value-estimation tool.

Shares of the Seattle real-estate-information service at last check were down 5.5% to $155.24.

For more than 500,000 properties across 20 markets in the U.S., the company has added language on its websites and apps inviting owners to “sell to Zillow for your Zestimate.”  

Zillow sends an inspector to a home. The inspector provides a list of needed repairs and an adjusted final offer, and the homeowner can pick a closing date.

To determine the Zestimate, Zillow said it uses data from public records, feeds from multiple listing services and brokerages as well as artificial intelligence, including computer vision and a deep-learning neural network to incorporate data from photographs.

The company is pairing the program with Zillow Offers, the company's home-buying service through which customers can sell their homes directly to Zillow.

"Presenting the Zestimate as a cash offer to qualifying homes up front will save time, reduce friction and provide greater transparency -- getting us closer to our vision of helping customers transact with the click of a button," Zillow Chief Operating Officer Jeremy Wacksman said in a statement.

Zillow introduced the Zestimate in 2006 and currently it is published for nearly 100 million homes with a nationwide median error rate for on-market homes of 1.9%. The most recent version of the Zestimate was released in mid-2019.

Eligible cities include Phoenix, Miami, Denver and Los Angeles.

In the beginning, the median Zestimate was off by more than 14%, according to Bloomberg. In 2016, former CEO Spencer Rascoff sold his Seattle house in 2016 for 40% less than his website said it was worth.

Some homeowners have sued Zillow over its estimates, though none of those lawsuits have succeeded, according to the company.