Zillow Moves to Improve Home Price Estimates
First free online home pricing site aims to tweak its accuracy and avoid unrealistic expectations of homeowners.
The Zestimate, the first free online home price estimate, is getting closer to helping buyers and sellers determine the actual sale price of a home.
In response to complaints that its estimates gave homeowners unrealistic expectations, Zillow, an online real estate marketplace and creator of the Zestimate, conducted a competition to improve its accuracy. Almost 4,000 teams of data scientists and engineers in 91 countries participated. The winner was announced in January.
When Zillow launched the Zestimate in 2006, its margin of error for home price estimates was about 14% nationally, says Skylar Olsen, director of economic research at Zillow. That improved to 4.5% by early 2019, she says. As the winning improvements are made this year, the margin of error will fall below 4% nationally, says Olsen. That means half of Zestimates will be within 4% of the actual sale price of homes, and half will be outside that margin of error, says Olsen.
Even with the improvements, Zillow says, homeowners should supplement the Zestimate with a comparative market analysis from real estate agents or a professional appraisal.