Zillow really knows how to put on a great conference to woo realtors. Aside from getting a free head shot and nice USB gadget I loved listening to Skylar Olsen, their featured economist. She showed graphs depicting the national trends in appreciation and then drilled down to local. Bellevue and Renton have appreciated the most at about eighteen percent, and according to their forecast Everett will appreciate the most in the future at ten percent.
She then explained the different models used to create a Zestimate, something I get asked about quite frequently at open houses. Just like the comparatives that I use, they use physical attributes, tax assessments and prior sales to reach a figure. They use different modeling approaches (hedonic, appraiser emulation, sale price trending, tax assessment, geospatial) and different algorithms (Decision Trees, Random Forest, SVM, KNN, Linear Regression).
They apply cleaning (identifying valid transactions), training (models with recently sold data) and scoring (models applied to all homes every day).
Eventually they come up with a range and pointed out that this is where we, as REALTORS®, go to work. We drill down on local trends, absorption rate, and recent comparables that are active, pending and sold to educate our clients who can then make an educated decision.
Here is a link where we can all follow Zillow’s trending reports: