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

Some brokers criticize the tool for inaccuracy

TRD MIAMI /
May.May 25, 2017 02:15 PM

Spencer Rascoff and Zillows “Zestimate” feature

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
Daily Digest Miami

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

(Illustration by Andrew Colin Beck)

These highly leveraged real estate firms could feel the squeeze in a downturn

Laurie Reader, broker-owner of Laurie Finkelstein Reader Real Estate (Credit: iStock)

Here’s how Zillow Offers will buy and flip homes in South Florida

Zillow CEO Rich Barton (Credit: iStock)

Zillow Offers launches in South Florida

Daily Digest Miami

Ben Carson dismisses concerns about Opportunity Zones, private equity landlord pays $10M for Palm Beach Gardens properties: Daily digest

Daily Digest Miami

Airbnb fights against Palm Beach County’s requirement, what’s next for Barneys: Daily digest

Flying carport rendering (Credit: Vimeo)

Flying carport at Miami Worldcenter featured on CBS Sunday Morning

arrow_forward_ios
Loading...