Valuation of a home

- Using price multiples to estimate the value of a business or another asset is very intuitive and it's a logical approach. This multiple approach takes advantage of the vast amount of information embedded in market prices. Let me give you an example using an asset that is near and dear to the heart of my brother Jim and me, the house in which we grew up. Now, the website zillow.com, is an online real estate database company. The Zillow site contains price estimates for millions of residential houses in the United States, in fact, I think that the Zillow site has estimated values for about 60% of the houses in the United States. Now, how is it possible for Zillow to have all of those estimates? Does Zillow employ thousands of real estate appraisers who go around the country and appraise houses? No, these Zillow estimates, which are called Zestimates, are generated using price multiples based on public data for recent house…