Zillow offers $1M prize to improve “Zestimate” algorithm

Some brokers criticize the tool for inaccuracy

New York /
May.May 25, 2017 09:00 AM

Zillow is offering a $1 million prize to a person or team that comes up with the best way to improve its Zestimates algorithm.

Zestimates, which is featured on Zillow’s property listing site, calculates an estimated home value independent of the asking price. The tool is wildly popular, but it is also controversial among brokers because its estimates are often far off the mark.

The company says it improved the tool’s median error rate from 14 percent when it first launched in 2006 to around 5 percent today, but that still means half of all estimates are more than 5 percent too high or too low. And the margin of error can be greater in certain locations. In early 2005, for example, the median error rate was 8 percent nationally but 11.1 percent in Manhattan.

Redfin, a real estate brokerage, has since launched a similar tool that it claims is more accurate than Zestimates, which Seattle-based Zillow disputes.

Stanford University economist Susan Athey told the New York Times that even a 5 percent error rate is low considering the complexity of the real estate market. “If individuals do not understand the market value of their property, they may pass over offers, making both buyers and sellers worse off,” she said. [NYT]Konrad Putzier 


Related Articles

arrow_forward_ios
Eric Gordon
Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
Big Tech locations in NYC
MAP: Here’s a look at all the Big Tech locations in NYC
MAP: Here’s a look at all the Big Tech locations in NYC
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
Zillow CEO Rich Barton (Getty, iStock)
Zillow hits the brakes on iBuying
Zillow hits the brakes on iBuying
CoStar CEO Andy Florance and REBNY president James Whelan (Getty, iStock, REBNY)
Brokerage execs gush over REBNY, CoStar listing portal. Agents aren’t sold
Brokerage execs gush over REBNY, CoStar listing portal. Agents aren’t sold
Humming Homes, new home management platform, raises $5.6M in seed round
Humming Homes, new home management platform, raises $5.6M in seed round
Humming Homes, new home management platform, raises $5.6M in seed round
How technology can hold bad landlords and developers accountable
How technology can hold bad landlords and developers accountable
How technology can hold bad landlords and developers accountable
JLL names new InfoSec head
JLL names new InfoSec head
JLL names new InfoSec head
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...