Many homeowners use Zillow's Zestimate tool to get an idea of what their home is worth. Recently, a class action lawsuit was filed against Zillow claiming that home buyers consider Zestimates as 'formal appraisals' and Zillow announced shortly after that it is offering $1 million to the "person or team who can most improve the Zestimate algorithm.” The company states this contest wasn't in response to the lawsuit but rather had been in the works for well over a year.

MarketWatch published an article on May 24th detailing the specifics of the contest and offered more details about the class-action suit.

According to MarketWatch, the class-action was filed by a suburban home builder based in Chicago. Barbara Andersen, the attorney behind the case, previously sued Zillow over what she claimed was a low Zestimate on her own property. When she took on the class action, she dropped her own lawsuit against Zillow.

The algorithm in question is meant to serve as a starting point in helping people estimate the value of a property, according to Zillow. The company claimed that its error rate nationwide was 5%, a level it called “incredibly low,” while acknowledging that the tool did have room for improvement.

Anyone interested in offering a solution has until Oct. 16, 2017, to compete in the qualifying round. The top 100 entries from that round will be invited to participate in the final round, which is slated to begin Feb. 1, 2018, and end Jan. 15, 2019.

Zillow says it publishes Zestimates on more than 110 million homes in the U.S., based on 7.5 million “statistical and machine learning models that examine hundreds of data points on each individual home.” It draws data from multiple listing services, brokerages, tax assessor records, and more.

In a news release, Zillow said that “to homeowners, sellers and buyers, the Zestimate home valuation remains an important data point. Combined with other information, like recent home sales, and the guidance of real estate professionals, the Zestimate helps consumers make smarter financial decisions.”

“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,” said Stan Humphries, Zillow’s chief analytics officer.

Article excerpts from May 24, 2017 MarketWatch article written by Andrea Riquier.