- The Upshot (NYT Blog) – Angry Over Zillow’s Home Prices? A Prize Is Offered for Improving Them
It’s one of the oldest tricks in an internet company’s playbook. Concoct a tool that gives the public new statistics on something — the quality of a restaurant or a toaster, say. Then watch visitors flock to the data and worry about accuracy later. Few such tools have been as controversial as ones that show people the market value of homes, using software algorithms to do the estimates. Homes are typically the most valuable asset in people’s lives, so emotions run hot when these estimates are seen as too high or too low. The best known of these tools — the Zestimate, from the online real estate website Zillow — began on the internet 11 years ago and has since amassed a huge audience of homeowners, shoppers and nosy neighbors. Sellers say unfair Zestimates can kill offers on their homes. About 171 million people visit Zillow each month, according to the company.
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We wrote about Zillow’s home price estimates in a post yesterday:
Zillow’s estimate is providing buyers of real estate with a different anchor, and one that is arguably more objective than the seller’s asking price. We’re not surprised a home builder finds the new anchor too low for their taste (highlighted above). And there are certainly instances where Zillow’s estimate could be misleading. Nonetheless, Zillow’s predictive model for estimating the sales price reduces the anchoring power of the asking price and levels the playing field between buyer and seller.