Zillow’s home valuation tool Zestimate attempts to estimate a home’s price based with a computer algorithm. Zillow looks at property information and surrounding neighborhoods to give homes on its website a Zestimate value, but more and more people are raising concerns about the tool’s accuracy.
- Zestimate overvalued a $300,000 Seattle home by 700%
- Zillow has admitted that Zestimate values are typically off by $40,000
- Zillow is desperate to improve Zestimate, offering a $1 million prize to anyone who can improve the algorithm
Sue and Roy Carlson purchased their home in June 2017 for just $225,000 (a particularly good deal because the property was initially slated for foreclosure). Other real estate companies (think Redfin and Realtor.com), now show the value of the home as somewhere between $268,000 and $318,000. Zillow, on the other hand, says that the property is worth $1.8 million.
As it turns out, Zillow admitted in 2017 that its Zestimates are generally off by around $40,000 when considering the “typical single-family home sold in Seattle.” In fact, when the company’s own CEO Spencer Rascoff sold his own house in 2016, the Zestimate was too high by a factor of 40 percent. Moreover, the house he ultimately purchased was misestimated by more than $1 million.
These issues have led to some lawsuits, as well as a number of attempts by Zillow to improve its estimation process. In fact, the company last year launched a competition with $1 million prize in prize money to better the Zestimate algorithm (the company recently announced 100 semifinalists who have already made some small improvements to the platform).
View the original article at Digital Trends