Mmmm... Delicious Big Data! But I've got a nagging suspicion that Zillow's numbers -- for all their algorithmic intelligence -- aren't quite as accurate as they'd like us to think. The company flags the issue in its IPO registration.
We may in the future be subject to disputes regarding the accuracy of
our Zestimates and Rent Zestimates.
our users with Zestimate and Rent Zestimate home and rental valuations.
A Zestimate is our estimated current market value of a home based on
proprietary automated valuation models that apply advanced algorithms to
analyze our data; it is not
an appraisal. A Rent Zestimate is our estimated current monthly rental
price of a home, using similar automated valuation models that we have
designed to address the unique attributes of rental homes. Revisions to
our automated valuation models, or
the algorithms that underlie them, may cause certain Zestimates or Rent
Zestimates to vary from our expectations for those Zestimates or Rent
Zestimates. In addition, from time to time, users disagree with our
Zestimates and Rent Zestimates. Any
such variation in Zestimates or Rent Zestimates or disagreements could
result in distraction from our business or potentially harm our
reputation and could result in legal disputes.
But that's really the only mention of this possible problem. A group at the University of Arkansas has tried to assess how good Zillow's information is over the past couple of years. First, they compared Zillow's data to the data from MLS, another real estate site, and found "a large discrepancy in information between the two." More recently, they looked at if data contributed by Zillow users improved things. They found that home entries got more complete but "the accuracy of Zillow's edited facts is not high."
On a purely anecdotal level, it seems like every time I talk with a homeowner (which I'm not) about what Zillow says about her property, she launches into some discussion about how the site gets a bunch of stuff wrong about her home. I'm curious: how would you rate the quality of the information in Zillow's "living database" about your home?
Update, 12:53 p.m.: Zillow keeps their own records of Zestimate accuracy, too, comparing their estimates with actual sale prices all the way down to the county level. It turns out that how close Zillow usually gets to the sale price depends a lot on where you live. In Denver, there's almost a 90 percent change that an actual sale price is within 20 percent of the Zestimate. At the other end of the spectrum is Dallas-Ft. Worth, where there is only a 71 percent chance that the sale price falls within that band around the Zestimate. In any case, good to see Zillow publicizing these numbers.