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Why Zillow is Betting on AI to Disrupt Homebuying
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Apr 2, 2025
Zillow wants to reinvent the home-buying experience using AI. Leveraging Zestimate and other new tools and acquisitions, the property platform is aiming to become a one-stop shop for renting and buying a home. But just how central is the Zestimate to Zillow’s strategy, and has it helped or hurt the company’s mission?
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This is the biggest financial transaction that most people will take in America in their lives
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Zillow is betting on AI to simplify the path to home ownership. Well, I'll tell you what's one of the most stressful things I've ever had to do
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and that's buying a house. The real estate platform wants to be a go-to for all parts of the home buying process
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And key to this is its signature Zestimate. I'd be a hard-pressed to buy somebody who doesn't know what a Zestimate is
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Amid criticism of the tool's accuracy and its use of AI, Will Zestimate and the company's use of AI tools help it maintain its dominance in the property tech market
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So I think when a lot of people think about technology and Zillow, a first thought is Zestimate
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Yes. Can you explain just a bit to start how that technology has changed over time
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Zestimate is one of the first machine learning algorithms we ever put out at Zillow
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It used to be this family of very interconnected, complicated models. And now at the center, it's a neural architecture
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And what that enables for us is the Zestimate now looks at both structured information
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like the location, the beds, the bathrooms, as well as unstructured information
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Think things like the images the 3D walkthrough to get that deep sense of the quality of the home and the value of the home And that really improved the accuracy of the Zestimate Zestimate uses data points like tax assessments and sales transactions to provide a natural starting point for homebuyers
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I think the Zestimate is the line in the sand. Everyone's saying, which side are we going to end up landing on when this transaction closes
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If you really kind of look at the Zestimate, it's very good to kind of saying, hey, this is an estimate
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this is kind of a potential range outcome because a trick with residential real estate is what has
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kind of been done to the inside. We place Zillow as kind of a category winner who's been taking
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Sharon as essentially a ubiquitous dominant brand within a category, which is residential real
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estate. Competitively speaking, really no one's near Zillow in terms of traffic volume, the leads
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they can generate. Zillow's traffic volume is almost double compared to homes.com, with Zillow
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reporting an average of 217 million monthly visitors and homes.com's reported 110 million
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monthly visitors but zestimate has also faced criticism frequently fluctuating home values a
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lack of human touch in price predictions and a failed home buying program and zillow is currently
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edged out by competitors on price accuracy redfin reports their estimate has a 1.99 percent median
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an error rate for on homes compared to Zillow 2 percent For them if it problematic it actually a much bigger risk to their brand If there a problem with this estimate it really distorting folks expectations
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The fact that their traffic volume is still leading, still dominant in the industry
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and it's enabled them to add more tools, would suggest that this estimate is a net positive
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for the company and consumers. As a publisher of content, they understand if you put bad things out there
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it can absolutely destroy your brand. And all the data would suggest that they've done a very good job at making sure folks really understand what it is
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And it's a starting point. Some question whether tools like Zestimate take data at face value
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Ignoring local histories, these concerns are most acute in gentrifying neighborhoods, where rising property values can overshadow the lived experiences of longtime residents
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Zillow emphasizes that a critical aspect of building their technology involves programming it to be fair and equitable for all users
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We make sure that people of different socioeconomic backgrounds or racial backgrounds aren't getting a disparate result
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We're doing a lot with large language models. And in real estate, agents or digital experiences can't answer certain questions
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We actually had to build a model that detects those kinds of questions and cuts them off
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And we put that out as open source this last summer Zillow investments in AI tech include a million cash acquisition of a customer relationship management system a virtual staging company and a media software and content
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management platform. The company has invested over $4 billion in tech and product innovations over
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the past decade. I think AI can do a lot of the stuff that you just don't need to be involved in
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note-taking, drafting what home to look at, seeing if it's available for a tour, but there's still
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that agent and buyer human element of going, hold on, I have unique needs, unique wants
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They've changed over time. They really focus on a strategy of a super app
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They are really creating a platform where you can find a house to buy. If you're not ready to buy, you can find an apartment to rent and maybe you're renting
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and now you're kind of between both. They're helping you figure out what you can afford and they can help underwrite mortgages
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or connect you to a mortgage broker. So they are solving all of the pieces for someone who essentially needs to figure out
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where to live. For Zillow, accuracy and customer trust is an important part of creating its AI tech
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We want to make sure people are confident in the answers they're getting from us
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be it the price or beds and bathroom stats or something that AI is generating
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And so we do a lot of testing to make sure people understand and know how to interact
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And we find that most people already expect AI is behind the scenes
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