Category Archives: Lending

Have issues with the Zestimate? Zillow is offering $1 million to fix it

Zillow knows its “Zestimate,” the online real estate giant’s property value estimation tool, isn’t perfect. Even after years of consistently working on the algorithm that powers the Zestimate, Zillow acknowledges that its Zestimate error rate is still 5% nationwide.

But Zillow wants to do something about it, and it’s offering up a sizable carrot for anyone who can make the Zestimate better: $1 million.

Zillow is offering up the $1 million in a contest it’s calling the “Zillow Prize.” To win, one simply needs to develop an algorithm that is more accurate than the one that currently powers the Zestimate.

Well, it’s not that simple. These things never are.

But here’s how it all breaks down.

Zillow is calling for “data scientists, engineers and visionaries” to compete in the contest and work to improve automated home valuations of 110 million homes across the U.S. that are currently shown on Zillow.

The Zestimate has long served as a contentious issue between real estate professionals and consumers.

While Zillow describes the Zestimate as a “great starting point” for determining the value of a home, homebuyers and sellers often believe that the Zestimate listed on a home is the true market value of the home.

As Zillow notes, it has dramatically improved the accuracy of its Zestimate, measured by how close the Zestimate is to the eventual sale price of a home, from 14% in 2006 to its current level of 5%. But it wants to do even better.

“We still spend enormous resources on improving the Zestimate, and are proud that with advancements in machine learning and cloud computing, we’ve brought the error rate down to 5% nationwide,” said Stan Humphries, creator of the Zestimate home valuation and Zillow Group chief analytics officer. “While that error rate is incredibly low, we know the next round of innovation will come from imaginative solutions involving everything from deep learning to hyperlocal data sets — the type of work perfect for crowdsourcing within a competitive environment.”

As Zillow describes it, the Zestimate home valuation is the “ultimate algorithm, one of the highest-profile, most accurate and sophisticated examples of machine learning.”

And the Zillow Prize will mark the first time that a portion of the proprietary data that powers the Zestimate home valuation will be available to individuals outside of Zillow, the company notes.

The contest will be broken up into two rounds, a public qualifying round, which opens on May 24, 2017, and concludes Jan. 17, 2018, and a private final round that begins Feb. 1, 2018, and ends Jan. 15, 2019.

Here’s how the contest will work, per Zillow:

Contest participants have until Oct. 16, 2017 to register for the qualifying round, download and explore the competition data set, and develop a model to improve the Zestimate residual error. The top 100 teams from the qualifying round, those whose solutions most reduce the difference between the Zestimate home valuation and the actual sale price of the homes within the dataset, will be invited to participate in the final round and compete for the $1 million dollar prize.

In the final round, the winning team must build an algorithm to predict the actual sale price itself, using innovative data sources to engineer new features that will give the model an edge over other competitors. The home value predictions from each algorithm submission will be evaluated against real-time home sales in August through October 2018. 

In order to take home the $1 million grand prize, the winning algorithm must beat Zillow’s benchmark accuracy on the final round competition data set and enhance the accuracy further than any other competitor, Zillow said.

Additionally, a $100,000 second place prize and $50,000 third place prize will also be awarded in the final round. A total of $50,000 will also be awarded to the top three ranking teams in the qualifying round.

So, to all the “data scientists, engineers and visionaries” out there, we wish you luck. The real estate industry is rooting for you to strike it rich.

Article source: http://www.housingwire.com/articles/40206-have-issues-with-the-zestimate-zillow-is-offering-1-million-to-fix-it

Black Knight Financial Services unveils municipal lien search

Black Knight Financial Services is rolling out a new tool that it will help identify municipal liens that would go unseen in a typical property report and are outside the scope of title insurance coverage.

According to Black Knight, its new “Municipal Lien Search” can identify whether a property has outstanding county debts; code and force violations; waste, water or sewer issues.

“Unrecorded municipal liens can remain undiscovered and become the responsibility of the new property owner upon closing. Black Knight’s Municipal Lien Search solution offers a faster and simpler way to help identify unrecorded property liens,” the company said in a release.

The company said that through access to its property and tax data, Black Knight can quickly help identify outstanding property liens, violations, assessments and more that wouldn’t show up in a standard title search.

“With this innovative tool, which is part of our national, comprehensive title solution suite, we are helping buyers and title companies keep informed during the origination process by shedding light on any outstanding debts on a property,” Lisa Roessler, vice president of Black Knight Title Solutions division, said. “Making buyers aware of any outstanding liens before closing helps reduce their risk and provides for a better borrower experience.”

Article source: http://www.housingwire.com/articles/40207-black-knight-financial-services-unveils-municipal-lien-search

Gamechanger: Zillow getting into home selling business with "instant offers"

In many ways, Zillow was one of the leaders in the online real estate revolution, helping to democratize the home buying process and enabling prospective buyers to search for their next home from the comfort of their current home.

And now, Zillow wants to revolutionize the way that people sell their homes as well, as the online real estate giant announced this week that it is launching a pilot program called “Zillow Instant Offers.”

Through the program, which is now testing in Las Vegas and Orlando, homeowners looking to sell their home will be able to get cash offers on their home from selected investors interested in buying it, all within Zillow’s platform.

If the seller decides to use the “Instant Offer” program, they will also receive a comparative market analysis from a local real estate agent, which would allow them to compare the investor offers to what their home might be worth on the open market.

Consider it a “Zestimate” on steroids.

Zillow’s Zestimate, the property value estimation tool that appears on every listing on Zillow, serves as a point of contention for real estate professionals and consumers alike.

As previously noted, homebuyers and sellers often believe the Zestimate to be the true market value of the home, rather than simply a “great starting point” for determining the value of a home, as Zillow describes it.

When Zillow claimed last year that it significantly improved the accuracy of its Zestimate tool, the company said that ultimately a home is worth only what someone is willing to pay for it.

And now, home sellers that use the “Instant Offers” program will have concrete, tangible offers from investors ready and willing to buy their home, as well as an analysis of what their home might be worth if they list it on the open market instead.

Here’s how it works, according to Zillow:

To participate in Zillow Instant Offers, verified homeowners interested in receiving investor offers confirm information about the home (number of bedrooms, square footage, etc.), highlight any updates and provide several photos of the home. From there, select investors who buy homes in the area can present their offers alongside the CMA from a local real estate agent. Any investor offers and the CMA will include an overview of fees associated with each option, to enable sellers to make an informed apples-to-apples comparison.

The seller is not obligated to accept any of the investor offers, but in a release, Zillow said that it believes the program will help sellers who may not be interested in the traditional home selling process.

“People today expect speed and convenience as the foundation for many of their transactions – including when buying or selling a home,” Zillow said in a release.

“Selling a home can often be an overwhelming task as home sellers have the challenge of getting their home ready to list on the open market, while facing the uncertainty of when their home might sell and at what price,” Zillow continued.

“By using the Zillow Instant Offers marketplace, home sellers can alleviate some of that stress by eliminating the need to prepare their home for sale (staging, open houses, etc.), and gain additional control and certainty over aspects like closing date and price,” Zillow added.

If any of this sounds familiar, it’s because this is basically the business model of Opendoor, an online marketplace that buys homes direct from homeowners.

Here’s how Opendoor, which currently operates in Phoenix and Dallas-Fort Worth, works: A homeowner seeking to sell their home can go to Opendoor, enter details about their home, and get a near-instant price quote for the home.

Then, if the seller accepts, Opendoor then allows the seller to close on the sale when they’re ready, rather than on the timeline of another buyer.

While Opendoor cuts real estate agents out of the process, Zillow states that “Instant Offers” will include agents throughout the process.

In addition to investors being required to use an agent, should a homeowner select an investor’s offer, Zillow will also offer to connect them with a local agent to represent them throughout the transaction, Zillow said in its release.

Zillow doesn’t provide much detail on the investors who will participating the pilot program, simply stating the following in its release: “During this test in Las Vegas, Nev., and Orlando, Fla., Zillow is working with a handful of agents and select investors in each test market, who are active in the area. Participating agents will be requested to record the sale with their local Multiple Listing Service.”

An article about the program from Inman stated that Invitation Homes is participating in the pilot. HousingWire can confirm Invitation Homes’ involvement in the program, via a Zillow spokesperson. HousingWire contacted Invitation Homes for comment on its participation in the program, but as of publication, the single-family rental operator has not responded.

So why is Zillow doing this? Jeremy Wacksman, Zillow Group’s chief marketing officer, said that the company is trying to fulfill the needs of its users.

“Sellers are looking for more solutions when selling their home. For some, selling in a short timeframe with certainty around the closing date is attractive, or even necessary,” Wacksman said.

“Across many industries, we’re seeing a rise of technology assisted transactions, and many consumers desire this type of innovation in real estate,” Wacksman said.

“We want to provide options for convenience, while providing home sellers with useful information to help them make an informed financial decision,” Wacksman concluded. “That’s why we provide them with any offers submitted by investors, as well as an estimate from a real estate agent who can help them better understand what that home may sell for on the open market.”

Investors who participate in the program will also be doing so using DotLoop, a company that aims to simplify real estate transactions by enabling brokerages, real estate agents, and their clients to share, edit, sign and store documents digitally.

DotLoop is also a subsidiary of Zillow Group, which bought the company for north of $100 million back in 2015.

The article from Inman states that Zillow will not be taking a cut of these transactions, perhaps alleviating concerns about RESPA, the Real Estate Settlement Procedures Act.

Zillow is already facing a RESPA investigation from the Consumer Financial Protection Bureau related to its real estate agent advertising program.

But if the Instant Offer program proves successful, will Zillow begin to officially act as a broker and take a percentage of each sale? Inquiring minds (at the CFPB and beyond) will want to know.

No matter what, the real estate world is facing another seismic shift thanks to Zillow.

Here’s a look at what a seller will see on Zillow’s platform when they recieve the offers:

Zillow Instant Offers

(Click the image to enlarge it. Image courtesy of Zillow.)

Article source: http://www.housingwire.com/articles/40191-gamechanger-zillow-getting-into-home-selling-business-with-instant-offers

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