REALTORS® are to home sales what pilots are to flights

Pilots in airplane

While automated home value estimates may be useful in certain applications, they can not take the place of the expert pricing advice of a real estate agent.

Remember a few years back when that plane’s autopilot algorithm made a perfect emergency landing on the Hudson River in New York City?
Me neither. That’s because an algorithm didn’t land that plane. An experienced human pilot did. If you’re wondering what this has to do with Lakes Region real estate, bear with me and read on.

On January 15, 2009, US Airways Flight 1549 was rocked by a rapid succession of explosive bangs less than three minutes after takeoff. It was the unmelodious percussion a commercial jet makes while smashing through a large flock of Canadian geese at more than 200 miles per hour.
The plane was about 2,818 feet above New York City when its twin engines instantaneously “ingested” multiple birds roughly the size of Thanksgiving turkeys. The engines belched flame then went dead silent. The cabin flooded with the odor of fuel.

The pilot in command, Chesley “Sully” Sullenberger, issued a Mayday: “This is Cactus 1539, hit birds. We’ve lost thrust on both engines. We’re turning back towards LaGuardia.” But Sully  quickly realized they’d never make it back. He  considered Teterboro Airport in New Jersey but made another snap decision based on many years of education and experience. He radioed: “We can’t do it … We’re gonna be in the Hudson.” The aircraft began a 240 mile per hour “glide descent” and Sullenberger addressed passengers and crew with three little words you never want to hear from your pilot: “Brace for impact.” Sully then “ditched” (the euphemism for crash landing a powerless plane not designed for water landings) the commercial airliner into the Hudson River at approximately 140 miles per hour.

I’m certain many of the geese involved didn’t make it, but all 155 passengers and crew aboard Flight 1549 survived. The incident became known as the “Miracle on the Hudson.” Stephen Rice, Ph.D., an aeronautics and robotic flight expert with Embry-Riddle Aeronautical University later admitted, “No autopilot today could have landed the plane on the Hudson River.”

So what does this gripping introduction have to do with Lakes Region real estate? In real estate, as with commercial aviation, technology is a useful tool. But there is simply no substitute for human experience and judgement.

Millions of home buyers and sellers have been engrossed with the home value equivalent of autopilot. Just visit a major real estate dotcom like Homes.com, Zillow or Redfin, enter an address and instantly get a free estimate (based on “proprietary algorithms”) of that home’s value.
But air passengers rely on experienced professionals (not just sophisticated technology) to get them where they want to go, and home buyers and sellers should too. Let me tell you why.

Last year an independent research firm published the results of a nationwide study of home sales and reported that the Redfin Estimate “more accurately predicted the value of thousands of homes for sale” than estimates by Zillow and Homes.com. Of the 5,074 homes sales evaluated in the study, 64 percent sold within three percent of the price predicted by Redfin, compared to 29 percent for Zillow and 16 percent for Homes.com.

But if you analyze those numbers critically, this study really shows that Redfin offered the least inaccurate automated prediction of home value.
Redfin’s predictions were three or more percent off closing price 36 percent of the time. Zillow’s Zestimate® was outside that range with 71 percent of its predictions, and Homes.com predictions were more than three percent inaccurate a whopping 84 percent of the time.

So think of it this way… would you feel confident flying an airline with a 36 to 84 percent likelihood of missing your destination airport’s runway by at least three percent? Then how much trust can you place in algorithms scientifically proven to guess home value too high or too low 36 to 84 percent of the time?

The study also reported that the median prediction error rate (how much estimates exceeded or fell below actual sale price) for Redfin was 2.06 percent off actual sale price. Zillow had a 5.95 percent median error rate, and Homes.com’s was 10.26 percent.If you apply those error rates to the median closed price for single family homes sold in New Hampshire in 2017, Redfin’s autopilot guess would be off by $5,479 in home value. Zillow’s would be off by $15,827, and Homes.com would be $27,291 too high or too low. (For reference, as a whole single family homes sold in New Hampshire in 2017 closed 1.46 percent below listed price.)

Don’t get me wrong, technology is a powerful tool. Real estate is a data driven career and REALTORS® depend on digital SLR cameras, drones, smart phones and mobile devices, computers, web applications, satellite imagery, databases, CRM systems and a variety of software. But we ultimately rely on human judgement and experience because we know that your home’s sales price is likely to depend upon many factors alien to algorithms, including the property’s condition, the motivation and means of buyers and sellers, the marketing skills of the agent, and the psychological impact of supply and demand levels.

Automated estimates can be useful, but I believe home valuation is more challenging in New England, where homes built and added onto since the 1700s can neighbor ones constructed in the 21st Century. The quality of land and view here can vary dramatically between the subject property and a comparable home a half mile away. Algorithms that are accurate in metropolitan markets, where builders quickly erect hundreds of standardized condominiums or single family homes based on the same materials and handful of models, can struggle with the unpredictable variables New Hampshire’s rural real estate market is full of.

The bottom line is that technology is a useful tool but in real estate as with airlines there is no substitute for human experience and judgement. That’s why Redfin’s website says its automated Estimate “is just a starting point—it is not an appraisal or a substitute for the expert pricing advice of your real estate agent.”

In other words, if an estimate with a 36 to 84 percent chance of being off the mark is good enough, trust autopilot pricing (did I mention that Lawrence Sperry, the inventor of autopilot, fatally crashed his plane into the English Channel?). If you’d like what Redfin calls “expert pricing advice,” contact me.

Brent Metzger is a saleBrent Metzger, Realtor at Roche Realty Group in Meredith NHs associate at Roche Realty Group in Meredith, NH.  He can be reached on his cell phone at (603) 229-8322, at the office at (603) 279-7046, or by e-mail: brent@rocherealty.com

Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.

Share on facebook
Share on twitter
Share on reddit
Share on pinterest
Aerial view of Lake Winnisquam and Sanbornton, New Hampshire

The Rural Character of Sanbornton, New Hampshire

Sanbornton embodies all that one expects to find in an old New England town. This …

Read More →
Castle in The Clouds is one of Moultonborough's largest attractions.

Moultonborough’s 66 Miles of Shorefront Captivates

By landmass Moultonborough, NH is the largest lakefront community in the Lakes Region with 59.7 …

Read More →
Kevin Shaw - Roche Realty Group

Kevin Shaw of Roche Realty Group is Top Producer for 2021

Laconia— Frank Roche, president of Roche Realty Group with offices in Meredith and Laconia, recently …

Read More →
Wolfeboro, NH — The Oldest Summer Resort Town In America

Wolfeboro, NH — The Oldest Summer Resort Town In America

Wolfeboro: a Brief History Nestled in the foothills of the White Mountains and on the …

Read More →

Roche Realty Group Reports Record of $170 Million in Sales

Meredith- Frank Roche, President of Roche Realty Group, Inc, with offices in Meredith and Laconia, has …

Read More →
Meredith NH

Gilford and Meredith NH – How Do They Compare?

There are 25 towns and cities comprising the Lakes Region. This week I thought I …

Read More →

EM Heath, LLC Acquires 1084 Union Ave in Laconia

The future of Ace Hardware EM Heath LLC in Laconia became solidified this past week …

Read More →
Roche Realty Group Sells Landmark Commercial Building in Gilford, NH

Roche Realty Group Sells Landmark Gilford Commercial Building

Gilford- One of the most visible, historic landmark commercial properties in New Hampshire’s Lakes Region …

Read More →
New Commercial Constructioin in Lakes Region

Commercial Sales Increasing in the Lakes Region

Recently I’ve been outlining the sales activity for residential, waterfront, and multi-family apartments in the …

Read More →
Laconia NH Commercial Building Sale

New Owner for 8,447 Sqft. Commercial Building in Laconia

Laconia— Exciting news for the downtown Laconia district. Another substantial commercial building, including approximately 8,447 …

Read More →

Strong Demand for Multi-Family Apartments in NH’s Lakes Region

Last week I was driving through Loudon Road in Concord in the busy heights area, …

Read More →
NH Lake

Area Lakes Show Considerable Appreciation

Below you will find data and insight into what’s happening in sales activity on 8 …

Read More →
inflation in shopping center / grocery store

More Inflation Concerns

More Inflation Concerns I submitted an article a while ago titled “Is Our Current Inflation …

Read More →
Alpenrose Village Retail Center located at Rte. 11 B / Rte. 3 in Weirs Beach, Laconia

Roche Realty Group Sells Alpenrose Village Retail Center

Laconia, NH – Tom Drouin of Roche Realty Group in Meredith represented both the seller and the …

Read More →
As the Real Estate Season Turns

As the Real Estate Season Turns

“There’s hope for buyers on the horizon, with more real estate opportunity to come.” This …

Read More →

10 Things to Consider if You’re Buying in a Seller’s Market

Anyone looking to buy a home today knows they are in a seller’s market, which …

Read More →

Third Quarter Update – Lakes Region Real Estate Activity

I’ve pulled up some data to provide all of you with some current insight on …

Read More →
Home Maintenance - Person repairing wall in house

Home maintenance the difference between sold and stuck

Be honest… is your home in need of some repairs? Because the truthful answer to …

Read More →
Coins stacked up indicting inflation

Is our Current Inflation “Transitory?”

The Federal Reserve officials have described the current period of high inflation as “transitory.” In …

Read More →
ABBA Tribute performing at the Lakeport Opera House

Meet you at the Lakeport Opera House

Last Saturday, Nancy and I were invited to the Lakeport Opera House to take in …

Read More →
Picture of

The New Hampshire Advantage

All of us who live in New Hampshire’s beautiful Lakes Region certainly have lots to …

Read More →

Just like vacation seasons, vacation homes come and go

When you think about it, all homes are actually seasonal properties. Whether it’s a primary …

Read More →

Hunt for lower prices like a lone wolf

If you ever watched Saturday morning cartoons back in the day, you may recall Looney …

Read More →
Birds eye view of Lakes Region New Hampshire

Lakes Region Real Estate Market 6-Month Comparison

We are halfway through 2021 already, and as we head down the second-half stretch, I’ve …

Read More →
The "Village Store" in Gilford, NH

The “Village Store” in Gilford Has New Owners

Gilford— The “Village Store” in scenic Gilford Village, a Lakes Region landmark since 1836, was …

Read More →
Lakes Region NH - aerial view of Lake Winnipesaukee NH

Lakes Region Waterfront Sales Comparisons

I thought I would look at the real estate activity on the Lakes Region’s four …

Read More →
Island Living on Lake Winnipesaukee in NH - aerial view of Welch Island, Lake Winnipesaukee

Island Living on Lake Winnipesaukee

The thunder of motorcycles has arrived in the Lakes Region. After a long year of …

Read More →
summer fun in nh - swimming in the river

Summertime Adventures Around the Lakes Region

Memorial Day weekend has arrived, and all of us are excited to kick off the …

Read More →
Are we in a real estate bubble?

Are We in A Real Estate Bubble?

Back in April, the red hot search on Google™ was “when is the housing market …

Read More →

Roche Realty Group Sells Artie’s Subs & Pizza

Moultonborough, NH – Brian and Kara Dillard of Barrington, New Hampshire, have recently purchased Artie’s …

Read More →
Laconia, NH - City on the Lakes

Laconia— City on the Lakes

The 17,000 resident, “City on the Lakes,” is nestled on the shores of three of …

Read More →
Housing Bubble

What if it’s not a bubble?

It’s a mad mad mad world of real estate right now.  The frustrations of buyers …

Read More →
Alton, New Hampshire on Lake Winnipesaukee

Alton’s Treasures — Natural Resources

Alton, New Hampshire is a scenic community with wonderful natural resources. The town envelopes the …

Read More →
Moultonborough, New Hampshire

Moultonborough, NH — Low Taxes Attract!

Moultonborough, New Hampshire, is a scenic and idyllic community on the northern shores of Lake …

Read More →
Gilford, New Hampshire on Lake Winnipesaukee

Gilford Recognized For Its Quality of Life

Gilford, New Hampshire, has always been a popular destination and a great community to live …

Read More →
Meredith Village on Lake Winnipesaukee, New Hampshire

Meredith, NH—One of the Top 10 Best Small Towns on the East Coast

It’s always good to see our local towns highlighted in national publications, and recently Meredith …

Read More →

Economic Concerns for Real Estate

For the first time in decades, fiscal and monetary policy will likely remain easy during …

Read More →
The Ledges on Newfound Lake

The Ledges at Newfound Lake

     It is always with mixed emotions how we view the development of our natural areas. …

Read More →
Lakeview Golf Club in Belmont on 172 Acres Sold by Roche Realty Group

Lakeview Golf Club in Belmont on 172 Acres Sold

Belmont, NH- The beautiful 9-hole Lakeview Golf Club located at 89 Ladd Hill Road in …

Read More →
Nutmeg Inn in Meredith NH Sold

Nutmeg Inn in Meredith Sold

Meredith, NH- The historic country Nutmeg Inn located at 80 Pease Road in Meredith has …

Read More →
Housing Inventory Lacking - Lake Winnisquam, NH

New Hampshire’s Four Largest Lakes Lack Inventory

As we’re nearing the 1st quarter of sales activity in the Lakes Region, I thought …

Read More →
Lakes Region Real Estate Market - View of NH Lakes

Real Estate Tidbits in The Lakes Region

Here’s a quick update on the market and a few things I’ve observed that will …

Read More →

Roche Realty Group sells “The Anchorage at the Lake” Resort on Lake Winnisquam

Tilton, N.H. – “The Anchorage at the Lake” Resort located on Lake Winnisqaum and Route …

Read More →
New Construction in the Lakes Region

New Construction and Re-Sale Housing Dilemmas

I’ve seen a considerable amount of new construction and home remodeling taking place in my …

Read More →
Lakes Region NH

Lakes Region Market Competition is Fierce

We are now entering March, the unofficial beginning of our Spring Selling Season. We have …

Read More →
Home inspection report

Reasons Why You Should Not Waive a Home Inspection

We have a very competitive real estate market here in the Lakes Region due to …

Read More →
Photo of homes in New Hampshire's Lakes Region

NH’s Housing Inventory Needs One Thing — LISTINGS

This week I’d like to provide you with a summary of what New Hampshire’s Real …

Read More →
Wicwas Lodge and Lakeland School Property

Roche Realty Group sells the historic Wicwas Lodge / Lakeland School Property

Roche Realty Group, with offices in Meredith and Laconia, recently sold the Lakeland School property …

Read More →
Night picture of Laconia NH

Lakes Region—One of the Countries Hottest Neighborhoods in 2021

Imagine it’s Super Bowl weekend and there’s not a chicken wing or a pizza to …

Read More →
Hiking in New Hampshire

New Hampshire, Vermont, and Maine Peak Attractions

In my younger years in school, I always loved geography as a subject. Living in …

Read More →

Leave a Comment