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October 26, 2006

Comments

David G from Zillow.com

Hi Christine, it's David G from Zillow.com.

I understand how you chose the title for this post, but the opinion that "Zillow is less than 30% accurate" is unsubstantiated from what I can tell. The NCRC's report claims to have analysed somewhere between 18 and 200 Zestimates but doesn't - as far as we can tell - illustrate how the 30% number was caclulated.

Zillow is transparent about Zestimate accuracy and we measure our performance against the actual sales transactions of millions of of homes. We calculate that 62% of Zestimates are within 10% of sales prices and that the mean Zestimate error is 7.2%.

Zillow users can review this metric for their local Zestimates on this page: http://tinyurl.com/fgz5k.

Christine

David - Thank you for your comment here - First of all your link is not working. Secondly, Just so I know I am understanding you correctly - You stated that your Zestimating is within 62% of accuracy.. So that means by my calculations that the other 38% are wrong. Am I right to assume this? If in fact this is your argument, there are alot of people losing alot of money - I apologize if you feel that my 30% is wrong to say - but that is a huge margin of error as far as I am concerned. From all my years of school - 62% is a failing grade!

Roberta Murphy

David: In securities there is the standard disclaimer: "Past performance is no guarantee of future performance...."

Perhaps the same warning should be attached to all current real estate valuations. It is hazardous to project current value based on prior closed sales. Many of those prior buyers are now underwater.

David G from Zillow.com

Hi, it's David again.

I'm sorry 'bout the link. This should work:
http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

You're right, Christine, that is a non-trivial error -- and that's also how AVM's work -- "out of the box", they just provide a starting point for valuation research.

The issue regarding AVM accuracy is less related to the math than it is the quality of the data input to their models. Simply put, AVM's don't visit homes, so their inputs are often less than perfect. This is why it's crucial for AVM's to be transparent about both the inputs used, and the accuracy measured.

So, for an AVM to be useful more than say 60% of the time, it needs to do more than just spit out number -- it needs to allow experts to refine the inputs. Zillow excels in this area. Our experts are the owners who have claimed their homes and the real estate professionals who advise them. Now owners can publish complete and accurate home facts next to the (sometimes incomplete and even incorrect) public records on Zillow so that others can use more correct inputs when they calculate estimates using our tools. Owners can now also publish their revised estimate based on corrected inputs.

We don't measure the accuracy of the refined estimates (yet - good idea though), but it's significantly higher than those based purely on the public records.

Expect to see us do more in this area of expert / owner-generated information -- and to continue to improve the "out-of-the-box" accuracy of our AVM through tweaks to the math and the addition of more data sources.

Christine

David - I look forward to see what or how Zillow will be tweaked. Listen, I am not in any way acting against Zillow. I don't find that your services to be any different than our Acris System here in Ny (they commute the property taxes based on the Property Value) which is all public records. So what I see in Zillow is that you re-invented the wheel and refined the public records data. I have nothing against that. But, there is a difference in the way that you deliver the results and the way the public records delivers the results. In addition to that, I feel that the owners who are tweaking the results could also work against the sellers. You know as well as I know - everyone has a better house than the next door neighbor. So I do think that this will create some "puffing" to put it lightly. Then it will be left up to the Realtors to let the owners know how much REALLY they can get for their home.
Lastly, I do have a serious issue with Realtors who keep the API on their sites. I think that is also very misleading.

Christine

David - I also want to add that I do find you, to be a very patient man. I have to give you "props" for responding to almost every negative/possitive article that I have seen about Zillow. You to say the very least, are a reputable man -

David G from Zillow.com

Christine - you're very kind, thank you. I love what I do and can luckily appreciate & learn from most perspectives on Zillow and the R/E industry in general.

We've excluded owners' facts from the automated Zestimates - for now. But I must say, I'm encouraged by what I'm seeing - owners seem honest, almost to a fault, about their updates on Zillow.com. The more I think about it, the more I think it's in an owners interests to accurately represent their facts on Zillow. Where we let users write about their homes, it's another issue, and I've seen some published owner's estimates that reflect the "house-pride" you mention. That's OK. We're keeping an eye on this and allow visitors to report abuse - but from what I'm seeing, it makes sense to trust homeowners more. And if we do start to use owners' facts, our algorithms are designed in such a way that isolated incorrect Zestimates can't influence neighboring homes' valuations.

I replied to a "Christine" on an active rain blog about the API, was that you? In brief, we require that API partners publish a link on their pages that have Zestimates that says, "What is a Zestimate?" and that links visitors on our partners' web sites directly to a detailed Zestimate explanation on Zillow.com. We audit partners' compliance with this and other similar requirements and we limit the use of the API and its data.

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