Zillow makes real estate ‘sexy,’ revamps Zestimate algorithm

Many Zestimates are well below the asking prices for homes in the Seattle area (Click on photo for full description)

Zillow is making big changes to its Zestimate, the algorithm it uses to determine the value of homes across the U.S. The Seattle company, which is waiting to go public, also said that it has added valuations to about 25 million additional homes. That means Zillow now has home and rental Zestimates on about 100 million properties in the country.

“The new algorithm is producing Zestimates with significant improvements in accuracy,” the company writes in a blog post. “Nationally, our new median error is 8.5%. That’s 33% more accurate than what our median error with the old algorithm would be during the same time period.”

Zillow has long been criticized over its Zestimates, with many property owners disputing the value that the company affixes to homes.

Meanwhile, Zillow was honored at last night’s Webby Awards ceremony in New York. Director of East Coast sales, Justin Scott, was on hand to accept the honor. As is customary, winners are limited to speeches of five words or less.

What do you think of Scott’s speech?

 

  • New Millionaire

    Ummm … I don’t think this is working so well … my house (and all my neighbors) just went from about $400k to about $14M.  Thanks Zillow!

  • YaBut

    So now they admit how bad their product is. Now thy claim it is better. Pre IPO Hype.

    Wonder if it is a legal claim….

  • Mattyn

    Sexy? The new algorithmis is totally buggy. And Zillow customer service is basically an online forum.

    Good luck with your IPO. I will never buy into this stock.

    Zillow = MySpace
    Refin = Facebook

  • Anonymous

    Rachel from Zillow here:
    New Millsionare-What is your address? house#/street/city/state/zip You can email me at rachelr at zillow dot com. We definitely will take a look!

    Yabut- There was no “need” to change the Zestimate, but with user-submitted facts on more then 28 Million homes across the county, it made sense to look at the Zestimate algorithm and see if there was a better way to leverage that data to make Zestimates even better.
     

    • Anonymous

      So you admit you had a bad product to begin with. I don’t know why any home buyer would base their decision to buy a home, which involves hundreds of thousands of dollars, on this inaccurate info.

      • Anonymous

        Sassafrasjones- Actually, that’s not what I said at all. Also, a zestimate is a starting point only.  Here is more on Zestimates: http://www.zillow.com/wikipages/What-is-a-Zestimate

        • Anonymous

          A starting point? Lol. are you serious? Sorry, but I’ll stick with a real ACCURATE appraisal of my home, no need for a guesstimate.

          • James

            Agree, Zillow is a joke.  IPO is headed for a crash landing.

        • YaBut

          Rosen, you may be a well intended Zillow employee, but you are in over your head.

          Zillow has made a living providing bad information, leveraged on the backs of mortgage and real estate people providing free advice.

          They may get a lot of visits, but the time on the site is minimal.
          90 % of the visits are people curious about value, and Zillow just confimed their estimates were way off.

          This is a house of cards, that loses money, and their best days are behind them. Dot Com deja Vu.

          Hard to believe this model still warrants an IPO

          • Joe the Coder

            caveat emptor. (i.e., you should use your brains rather than some random number by some supposed expert)  I’m kind of surprised at the potshots being taken.  First, a company can and should tweak their algorithms to improve the results.  second, do people really see zestimate as that important to the product?  (hint, easy access to listings MIGHT be a LITTLE more important).  Third, do you guys really think it’s wrong for a company to tout even tiny advantages?

            House of cards?  I don’t think so.  Protectable business with a Warren Buffet “moat”?   probably not.  Warrants an IPO?  I see it as having a lot more substance than things like Pandora.  I’m not investing in either but zillow is a lot more real than pandora.

  • Bob

    I think it’s fairly obvious the CEO, paid spokespersons, press releases from Zillow are all going to say the Zestimates are improved, more accurate, a good thing ect. especially with the IPO to raise money to pay the bills close at hand..

    I would suggest taking a peak thru the last couple of days of Members of the Public commenting in the Zillow Advice Forum about it, the reaction, the anger, examples of obviously ridiculous Zestimates ect.
    They ain’t buying the Improved PR stuff, not one tiny bit but then they are not paid to.

    Investors beware, people thinking of buying shares beware..Like buying property I’d advise doing some research and verification of claims made by salespeople cause that is what PR people are..salespeople

  • Joe the Coder

    As a current house shopper, I like having the zestimate and a quick review this morning didn’t show any significant differences from last week.    In general, I take the zestimate with a large grain of salt since it is up to the seller to take an offer or not.

    I do think redfin is a little nicer but basically see them as interchangeable.

  • http://profiles.google.com/jmkinfo66 Jon Kolsky

    Zillow really is gaming the public and its users. Zillow lacks transparency on all levels, time for some big reform!

  • http://www.facebook.com/susanne.freeborn Susanne Freeborn

    Zillow suddenly dropped $30,000+ off the already low estimate for our house with the change in their algorithm, after showing a steeply declining history since 2008, so that now, according to their estimate, our remodeled house is worth less than we purchased it for in 1/2005.  It’s ridiculous.  The comparables that the appraisers used are showing values of $325,000 – $385,000 on Zillow. AND, Zillow makes a big deal about how they use the input that owners give, but they really don’t. Zillow ignores that information. They as much as said so in an email to me last week.  I just checked Redfin, the description of the size of our house is off by 500 square feet or so, and still eAppraisers shows a range from $266,761 to a median appraisal as $313,836 with a high of $360,912. Then I checked Homegain, which shows $320,725 - $348,614 - $376,503Zillow shows the right square footage (2186) & the following range:  $221,697 – $273,700 – $325,703, yet their charts show our home being worth more than we paid for it when we bought it and did show it rising to $422,500 at the height of the real estate boom, which would mean that their numbers are starting out $40K to $80K out of whack.  Our house would have lost over half of it’s value and local real estate has not dropped that much since 2008.