If you have a house or you have looked for one, you have probably checked its Zestimate — Zillow's best guess as what a house is worth today.
The number might help you determine whether you should sell your house, or if the home you are trying to buy is a rip-off or a bargain. Or you might just use it to see what your friend or neighbor's home is worth.
But how accurate is that number?
Long a source of complaints from real estate agents, Zillow's online valuations are far from perfect, the company acknowledged. For example, according to its own data, the Zestimate on the typical single-family house sold in Seattle today is off by an average of nearly $40,000.
More than 200 teams have started working on new home value algorithms in the 48 hours since the Seattle-based company started a contest to improve its Zestimates model — with a top prize of $1 million.
To win, teams will use Zillow data to create an algorithm that better predicts sales prices for about 110 million U.S. homes listed on the site. Each team's members and their scores are publicly available on the Kaggle platform, which is hosting the contest: The leading teams' models have improved slightly just from making tweaks over a 24-hour period, but still lag behind Zillow's predictions. One hundred finalists will be chosen next January, and the winners will be announced in January 2019.
Zillow said its Zestimates have improved significantly since launching 11 years ago and now have a median error rate of 5.6 percent. So half of homes end up selling within 5 to 6 percent of what the Zestimate said it was worth.
But that means half are sold for a price that's not so close to what the Zestimate predicted. In some cases, the error can be huge.