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Stan Humphries

Zillow

Chief Economist

Advice

  • (46 Contributions,
  • 0 Best Answers,
  • 57 Helpful)

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Zillow's use of a comparable value of $0/sq ft when sales price is known but square footage.

Response

Hi kjeldsorensen.  By "comparable homes" do you mean the "Nearby Similar Sales" shown for the home or the "Comparable Sales" shown when creating a My Estimate for the home?  Both of these sets of homes will include nearby sales to your house but it is not the $/SQFT from this set that is used to value your home directly (i.e., our algorithms don't use $0/SQFT to value your home).  The algorithm will use these and many other homes to develop a variety of models that are used to value homes in the area.  Some of these models use SQFT but homes without SQFT will not be used to estimate the influence of SQFT in the determination of the sale prices of recently sold homes. It is a common assumption that the nearby sales or comparable sales that we show to help users gather information about local sales are used directly and solely in the algorithms, but they are not.  They are used in conjunction with lots of other sales in the area (which are then adjusted via statistical approaches to develop models useful in estimating local sale prices). If you have suggestions for how to make this distinction more prominent to users, please let me know. As to why you are seeing large price drops, how do these price drops for your home correspond to changes in the Zillow Home Value Index for your area (shown on the Zestimates&Charts tab of the home)? If the trends are substantially different, is it possible that you have changed the underlying facts about your home recently? 

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so long since last update

Response

Hi.  Yes, we produced new valuations last Monday (4/20) and were planning to be offline for a couple cycles to make some improvements on the backend.  Ended up spending a bit more time to make sure everything was working normally but we're done now and have new Zestimates ready for delivery tomorrow. Thanks for noticing! 

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Zestimate HISTORY changed?!?!

Response

Hi Kevin.  A new Zestimate algorithm was put into place in January 2008 and we re-computed all historical time series at that time as well.  We don't plan to re-compute historical series very often (indeed, January was the only time we've done it since launch in 2006) for the very reason that you outline here: it can be disconcerting to some users when history becomes not so "fixed."  We do so, however, when there are major changes to the algorithm which we think will give our users a better sense of historical values both on homes (through Zestimates) and regions (through the Zillow Home Value Index). We promise these changes will be few, far between, and well publicized. In the case of your particular home, it looks like the changes made to your home facts (specifically, lowering the lot size by some 4,000 square feet) resulted in a lower valuation when the Zestimate history was recomputed (because when the Zestimate history was first computed, the original home facts were in place). Thus, the original valuation (using orignal facts) on the date of purchase was $560K, the new valuation (using revised facts) on that date is $475K and, in both cases, the Zestimate bumped up to the price you paid once the algorithm had knowledge of the sale (note, when recomputing history, the algorithm will not, by design, consider the sale price in valuations made before the sale date). Anyway, it sounds like you think the original valuation (with more square footage) was a more realistic price at the time you bought your home.  Taking the price for which the home sold prior to your purchase (sold for $346K in Aug 2003) and adjusting it by the change in the Zillow Home Value Index between Aug 2003 and June 2006 (when you bought it), one arrives at an adjusted prior sale price of $552K which is higher than the Zestimate at that time and closer to the price that you actually paid for the home. This might suggest that our models were putting too much weight on the models relying on home attributes relative to the ones relying on prior sale price (prior sale price becomes less influential in the mix of models around the three-year mark after a home is sold).Hope this helps.

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DANGEROUSLY INACCURATE COMPS & MISLEADING "Zestimate" !!!

Response

Also, ejgallaher writes, "Suppose Zillow provided the comps (as they do now), and allowed homeowners to create their 'layman's appraisal' of their own home? Of course, this could be abused by the homeowner selecting only the highest comps in the area. To counteract this possibility, anyone else could also browse the same comps, and if they wish, they could create (and publish) a 'dissenting opinion'. Everything would be completely transparent, because ALL the data that went into the estimate would be available for everyone to see...A system which encouraged, and enabled, a level of increasing knowledge and confidence in the real estate market would be fantastic."In fact, Zillow does provide this capability via the My Estimate tool. Using this tool, anybody can revise facts about a home, add in home improvements, and pick good comparable homes for a pricing analysis. If you're the owner or agent, you can also publish this estimate for all to see (it's shown right next the Zestimate created by the automated processes). We wholeheartedly agree that local users may have much more intimate knowledge of a home and can, therefore, create a better estimate and we encourage our users to do so and to publish this information for the benefit of other users.  As ejgallaher suggests, all the information associated with this custom valuation is shown to all users so that they can review and decide whether they agree or not with the valuation (and, if somebody doesn't agree, they can also create their own estimate of the home via the same tool).  See an example of a published owner's estimate here:http://www.zillow.com/homedetails/1308-Eagle-Dr-Windsor-CA-95492/51605513_zpidTo create your own estimate for a home, simply click on the Create link next to the My Estimate line that appears below the Zestimate (or the For Sale price if the home is on the market).The Zestimate is just a starting point in a pricing conversation and we encourage our users to help the larger community by updating facts and creating their own valuations.  We're not always right (but, in the spirit of transparency, we do always report how accurate we are in each area) and we hope our users will point out when we are not right and give other users the benefit of their local knowledge by creating and publishing their own value estimate.If these features on our site don't fully address your needs or you think we could do a better job of surfacing their existence to users, please let us know your ideas. 

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DANGEROUSLY INACCURATE COMPS & MISLEADING "Zestimate" !!!

Response

Hi. This is Stan Humphries from Zillow. There are a few comments here decrying the inability to update facts about a home on Zillow.  In fact, a homeowner or agent can do this on our site today. Simply claim the home and then you can modify all relevant facts about the house (click on the Edit link in the header of the Home Info section of any home details page).  Moreover, we will then utilize these facts when the next Zestimate is created. See, for example, this home which is for sale.  http://www.zillow.com/homedetails/home-info/48744716_zpid Here, the agent updated the square footage of the home and you can see the change in the Zestimate associated with these revised facts. Before the square footage was updated, the Zestimate was below $600K.  The agent then updated the square footage, resulting in a current valuation of around $680K (and the home is listed for sale at $660K).

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Zillow differs from Assessor

Response

Jim Avery:Thanks for your two examples of square footage issues in Kitsap. The issue typified by the Hillcrest example has been fixed and changes should be visible on the site this Friday (7/20). Thanks so much to you and others for bringing it to our attention. The issue typified by the 16th Street example apparently involves an Kitsap-specific problem with our data provider which results from unfinished basement area being passed to us in an incorrect field. We're working with our partner in this area to get this data fixed as soon as possible. Also, in the coming months, our valuation algorithms will begin to incorporate user-edited information so any incorrect data can be updated by the owner and will then be reflected in the Zillow Zestimate. We?ve already had almost 900,000 homes claimed by Zillow users so user-edited data is an increasingly valuable resource both for valuation and for informing other visitors of the latest up-to-date information about homes. That's a great idea about including an update date next to the Public Facts shown on the site. I've added the suggestion to our list of future enhancements. It doesn't seem too thorny to implement but I can't tell you right now when the change will hit the live site. Don't know if you'll be at the IAAO Conference in Atlanta in September but would love to meet you there if you're going.

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