Exploring the Impact of Zestimate on Real Estate Market Dynamics: A Case Study of Buyer, Seller and Renter Perspectives

Abstract

The Zestimate, developed by Zillow, is a prominent property valuation tool that estimates home values using a proprietary algorithm and diverse data sources. Since its introduction in 2006, it has gained significant traction due to its user-friendly and accessible nature, offering automated estimates of property values. The tool has evolved over time with enhancements in its algorithm and data inputs, aligning with advancements in real estate analytics and changing market conditions. Despite its popularity, the accuracy and influence of Zestimate on market behavior remain contentious, particularly regarding how it affects buyers, sellers, and renters. This study aims to address this gap by investigating the impact of Zestimate on these stakeholders' perceptions, decision-making, and market dynamics. The issue stems from the limited understanding of how Zestimate influences market behavior, potentially causing discrepancies between estimated and actual property values, which can affect transaction outcomes and market stability. Traditional valuation methods involve professional appraisers assessing various factors such as property condition, location, and comparable sales, which, while detailed, are time-consuming and costly. These traditional methods also face limitations in scalability, consistency, and susceptibility to human error. Given the increasing reliance on automated valuation tools like Zestimate, this research is essential to elucidate its impact on buyers' expectations, sellers' pricing strategies, and rental markets. By examining these effects, the study aims to provide valuable insights into the effectiveness of Zestimate and identify areas for improvement. The findings will be crucial for stakeholders seeking to navigate the complexities of the real estate market and enhance valuation practices. The research will also offer recommendations for refining automated valuation tools and Journal for Educators, Teachers and Trainers JETT, Vol.15(5);ISSN:1989-9572 311 improving overall market efficiency, contributing to a better understanding of digital valuation impacts in real estate.