Zillow expands use of Zestimate algorithm for purchase offers

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While the company will still use brokers and employees to price the offers it makes on many homes, it believes its Zestimates are accurate enough for certain purchases.

While the company will still use brokers and employees to price the offers it makes on many homes, it believes its Zestimates are accurate enough for certain purchases.

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Upon learning in 2019 that Zestimate — Zillow’s famous estimate of how much a home will sell for — was not used to price the homes Zillow buys itself, some Houston real estate agents chuckled. Zillow’s iBuying service, which made cash offers on homes, priced homes the old-fashioned way, with a local real estate brokerage running sales prices of comparable homes by hand.

That process is changing. While Zillow will still use brokers and employees to price the offers it makes on many homes, it believes its Zestimates are accurate enough for certain homes — those priced close to the area’s median, that trade often and are not too old or unique — that it can rely on its algorithm to make an offer.

Jeremy Wacksman, Zillow’s chief operating officer, said the development will allow the company’s iBuying service Zillow Offers, which makes cash offers on homes, to expand more quickly in markets like Houston.

“The more we’re able to automate, the more we’re able to scale efficiently.”

In Houston, the percentage of Zestimates that came within 5 percent of the sales price was 86 percent, according to the company.

Zillow is making cash offers based on some Zestimates in Dallas, San Antonio and 20 other markets in addition to Houston.

“For us, this is a really exciting milestone,” Wacksman said. “That’s what this process is all about — trying to get to this one-click nirvana of helping people move.”

rebecca.schuetz@chron.com;

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