Zillow looks to crowdsourcing to improve 'Zestimates'

Real estate site Zillow is launching a $1 million competition among data scientists to improve its "Zestimate" home valuations, but said the crowdsourcing initiative is unrelated to recent lawsuits filed in Chicago against the company.

The Seattle-based company on Wednesday said it was looking to boost the accuracy of its automated home valuations on 110 million homes across the country. Zillow says its Zestimates already have grown more precise and now about half the time are within 5 percent of the eventual sale price, compared with 14 percent when it launched in 2006.

Major upgrades to the tool were made in 2008 and 2011 and another will be rolled out by next month. The contest will be the first time Zillow has made a portion of its proprietary data related to Zestimates available to company outsiders.

The competition has been in the planning phase for a year, and is unrelated to lawsuits recently filed in Chicago, said Stan Humphries, Zillow's chief analytics officer who created the Zestimate.

Last week, a suburban builder and several individuals filed a suit in Cook County Circuit Court charging that Zillow uses "nonsense" methods to estimate home values that can lead to potential losses for home sellers. The suit seeks class-action status and an injunction against the company.

The lawyer who filed that suit, Barbara Andersen, herself sued Zillow weeks earlier regarding the Zestimate on her own Glenview town home, which she said undervalued the property and has been an impediment to its sale.

Zillow has said the claims in both suits are without merit.

The company has been a lightning rod for criticism for years, but despite complaints about its estimates being low or high, the home values tool has been popular with buyers, sellers and nosy neighbors. Zillow has stressed that its Zestimates should be used as a starting point for what a property is worth.

"We're in the thick of it, that's exactly where we want to be," Humphries said. "We're trying to create transparency for consumers; creating transparency around the price of that asset is extraordinarily important for us. That creates a lot of heat and light but we think it's useful what we're doing."

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