Artificial Intelligence Can't Beat Local Knowledge

More and more these days, your world is shaped by algorithms. Every time you do a Google search, look at your Facebook page or use GPS navigation to get from Point A to Point B, you’re interacting with an algorithm. 

Algorithms also are being used at a much higher level to make decisions on everything from medicine to criminal justice. And, for a time, they were the foundation of the hottest thing in real estate -- The Zestimate. 

Ahh, the Zestimate, that little algorithm from data company Zillow that purported to take a few facts you provided and the value of similar houses in your area to give you an estimated sales price for your home. 

There was just one problem. In the eight months the latest Zillow algorithm was in effect, the artificial intelligence that was supposedly made smarter every time it was used, well, it wasn’t so smart. Zillow recently announced it paid more than the homes were actually worth in nearly two-thirds of their purchases. They have been able to re-sell only 17,000 of the 27,000 homes it purchased (in a white-hot sellers market, mind you) and now are being forced to write off more than $304 million in inventory. 

Oh, and as a consequence of this machine-learning failure, 25% of Zillow’s staff will be losing their jobs. 

Said Zillow spokesman Viet Shelton on CNN Business, “The challenge we faced ... was the ability to accurately forecast the future price of inventory three to six months out.” That’s a bit of an understatement. Zillow’s estimates on some of their purchases weren’t just a little off the mark. They weren’t even in the same ZIP code. 

Artificial intelligence can, indeed, look at far more information and do so much more quickly than a single human being. It can take into account factors like comparable home sales in an area and how many people are looking to buy in a specific neighborhood. 

What it can’t do is go into your home and, in one second, pick out a critical factor that could torpedo a home’s value if you go ahead with the purchase. It can’t take into account the unquantifiable aspects of putting a price tag on a home, things such as the value of living down the street from your parents or in the same neighborhood you grew up in. Those simply are not things a piece of technology whose entire language is made up of 0’s and 1’s can do.

And that’s why The Allen Brake Team is here. 

We’re the human beings who catch that critical factor and make sure you don’t put an offer on a home that will become a financial drain to you for decades. We’re the men and women who know the actual people in the local real estate market, the ones who have relationships with preferred lenders, contractors, home-staging experts and professional photographers. 

We get to know our clients on a personal level. We listen to their motivations for wanting to buy or sell a home, and we help them achieve their dreams safely, calmly and confidently. 

The reality is that, as the Zillow debacle shows, truly knowing the local real estate market is an art, not a science. Yes, data comes into play. But for us, it’s data mixed with the experience and expertise of professional Realtors and the support staff of The Allen Brake Team that creates a feeling of calm and confidence in our clients. 

In other words, it’s OK to relax. We got this -- you, your family and the human beings behind The Allen Brake Team. 

The Allen Brake Team’s Calm & Confident Home Sale pledge is a 10-point promise from us to you, designed to take the stress out of the experience while making you the smartest person in the housing market. For more information, call (314) 375-3030.