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

Some brokers criticize the tool for inaccuracy

Miami /
May.May 25, 2017 02:15 PM

From TRD New York: 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
1500 Concord Terrace and Atal Bansal, founder and CEO of Chetu (Photos courtesy of Chetu)
Software firm Chetu buys Sunrise office property for $25M
Software firm Chetu buys Sunrise office property for $25M
(Photos courtesy of Hitzig Militello)
Argentine architecture firm opening first U.S. office in Miami
Argentine architecture firm opening first U.S. office in Miami
Founders Fund partners Peter Thiel and Keith Rabois (Getty/Illustration by Kevin Rebong for The Real Deal)
Silicon Valley’s Founders Fund inks Miami lease
Silicon Valley’s Founders Fund inks Miami lease
As resi brokers in South Florida report an uptick in sales and rentals largely fueled by homeowners fleeing dense markets like New York, office brokers say they’re starting to see a similar trend play out among tech firms. (iStock)
More tech firms eye Miami as Covid carries on
More tech firms eye Miami as Covid carries on
Daniel de la Vega with the previous website and the redesigned version (Credit: iStock)
One Sotheby’s rolls out new website during pandemic
One Sotheby’s rolls out new website during pandemic
Daily Digest Miami
FINCEN renews order looking at cash purchases, Barry Sternlicht is eyeing an economic slowdown: Daily digest
FINCEN renews order looking at cash purchases, Barry Sternlicht is eyeing an economic slowdown: Daily digest
Grand Lake Apartments and Yamal Yidios
Ytech sells a shuttered apartment complex in Belle Glade
Ytech sells a shuttered apartment complex in Belle Glade
(Illustration by Andrew Colin Beck)
These highly leveraged real estate firms could feel the squeeze in a downturn
These highly leveraged real estate firms could feel the squeeze in a downturn
arrow_forward_ios

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

Loading...