An online property search giant claims it has made "significant upgrades" to its "Zestimate" feature, which it claims has made it more accurate than ever.
Zillow says the changes to its home value estimation tool will allow its algorithm to "react more quickly to current market trends," and as a result has improved its "national median error rate" for the valuation of 104 million off-market homes to 6.9% – almost 1% better than before.
This new algorithm, it says, uses "neural networks" machine learning that "incorporates deeper history of property data such as sales transactions, tax assessments and public records, in addition to home details such as square footage and location."
Zillow has come in for scrutiny of the past for its Zestimate feature, which news reports have found tend to overvalue homes compared to the prices they eventually list for or sell at.
But Zillow is adamant that its estimation tool is more accurate than ever, which in turn saw it in February begin using its Zestimate as a basis for making cash offers for homes in certain markets – including the Twin Cities – via its Zillow Offers service.
"Since we introduced the Zestimate in 2006, we have never stopped innovating in order to provide consumers with the most accurate home valuations," the Zestimate creator Dr. Stan Humphries said in a press release.
"The new architecture we’re debuting today represents another significant step forward in our efforts to harness big data to create more certainty for consumers, which leads to better decisions."
Putting it to the test
So will it stand up to its claim of enhanced accuracy? Well, we put it to the test.
I checked the value of my home after receiving Zillow's announcement and my response was to choke back laughter and then light a cigar using a $50 bill.
The Zestimate is 2.4 times what we paid for it six years ago, and about $200,000 more than when I checked toward the start of the year.
Can I absolutely rule out that we would get that amount for it if we put it on the market in the current climate? No.
Would we be absolutely astounded if we did? Yes.
A house across the street from ours is currently on the market for about 50% more than what it sold for in 2013, which seems far more realistic than a 250% markup.