Spotting Undervalued Gems
Welcome to the Home Hunt! Here, we're going to use the Yestimate to find under-valued homes. If I were buying a home, I could use this to find the best deals!
Firstly, we need to set our criteria for what constitutes a dream home. In this case, we're aiming high - we're looking for houses with at least three bedrooms, three bathrooms, and boasting a generous living area greater than 2000 square feet. Houses like this are usually pretty expensive! However, if we use the Yestimate right, I think that we can find a home that fits this criteria that lies comfortably in a lower price range.
To find the homes with the best deals, we'll compare our Yestimate with the actual listed price of each house. If a house's Yestimate is significantly higher than its listed price, that's a good sign! It suggests that the house might be undervalued, offering more value than what's reflected in its price tag. With this, some of the "best" (my personal opinion) homes I found that were undervalued are given just below...
"Best" Single-Family Home
Property Details
Sell Price: $402,866
Yestimate: $569,474
Zestimate: $738,900
Bedrooms: 5
Bathrooms: 3
Area: 3,750 sqft
This home is absolutely stunning! Surrounded by nature with a lot of land, a ton of bedrooms and bathrooms, a huge living area, far-away neighbors, a close proximity to ponds and a river, and less than an hour away from Seattle, it's no wonder why the Zestimate prices it at a hefty $740k! Unlike the Manufactured Dream Home, the Yestimate agrees with the Zestimate that this home is very underpriced.
However, there's still a huge $170k difference between the Yestimate and the Zestimate. Why is this? Well, this likely lies in the incomplete dataset. One of the closest houses to this one is priced at $785k, and if I had to guess, this is probably being used in the Zestimate's algorithm. If I were to make Yillow better, I would acquire many more houses in my dataset and engineer features for the prices for all nearby houses.
"Best" Manfactured Home
Property Details
Sell Price: $450,000
Yestimate: $623,251
Zestimate: $296,000
Bedrooms: 5
Bathrooms: 5
Area: 4,911 sqft
This home is extra peculiar! Not only does the Yestimate dramatically overpredict it's price by $120k, but the Zestimate underpredicts this house's price by $150k! What is the discrepancy here?!
As shown in the image, this house is right next to what looks like two separate railroads! Since distance from railroads isn't a feature that goes into the Yestimate, this is likely one of the reasons why the Yestimate overpredicts its price so much. This just goes to show how far-from-perfect my Yestimate is and once again the importance of performing thorough data science. Although I tried to engineer as many features as I could with my limited dataset, if I were to improve on Yillow in the future, I would engineer TONS more features about the houses: proximity to railroads, proximity to highways, elevation, walkability scores, nearby school quality - everything I could think of!
What I Learned
This home hunt is an exciting demonstration of the applications of the Yestimate - if I were looking for a home in the future,
I could use it to find the best deals! However, the Yestimate is far from perfect. It's clear that the Yestimate does not take into account
nearly as many features as is required to consider all aspects of a house's value. For any future projects like this, I'll be sure to take with me
this knowledge of how important the data is!
Next: Conclusion
