Is QValue™ Up and Running?

—–Original Message—–

From: [removed]

Sent: Wednesday, February 11, 2015 4:43 PM

To: creed@qvalue.net

Subject: QValue Contact form submission

 

Comment by the user:

Is your QValue up and running yet?   Thanks.

 

Hi [removed], it is, but not quite public yet. The test from two weeks ago discovered some additional bad data from the MLS we are using for testing. The broker input for “subdivision name” is not a drop down, nor is it assigned by geographic location such as from a lat/long point, but is a free-form field. Brokers can input anything they like.

As just one example we found seven (7) different subdivision names input by brokers in just a single city block of 18 homes—one of which was “N/A”—nice. But it gets worse. That was based on the first entry for the field. Many of the brokers are tossing in up to three subdivision names into the field—you know the trick, input names you know are hot even though that’s not where the house is.

Additionally, we found about 5% of the homes were assigned bad lat/long numbers by the MLS or whoever is supplying that to them. They either land in the street somewhere or in some non-residential plot of land in the middle of nowhere. We had to create a program pulling them into proper location so they can be correctly identified and used in valuations.

Honestly, over the last six months all of our work is creating fixes for a really poorly designed MLS database and all of the inaccuracies in it (stuff like above plus misspellings, etc). If the public knew and the brokers realized just how bad the data in the MLS is they would give the function over to Zillow today :).

The software is done and has been fully functioning well for six months. It’s just that I won’t let it go public until I fix all of the MLS data inaccuracies.

We’ve created a fix of four new processes and algorithms to correct for this latest series of bad data discoveries. We will be running tests again in about a week. I am sorry for the delays.

Creed Smith

creed@QValue.net

800 W 8th Avenue #103

Denver CO 80204

303.906.6915

What Exactly Is QValue™?

Hi [removed], you do have an overall grasp of what the software does.  The software is an AVM which is also used in “reverse” as a buyer search tool.

Here’s the overview of how it works.  We start by creating proprietary polygons—geographic shapes; think of these as neighborhoods but smaller with a more precise design and purpose.  We use these to pull comparable properties from.  But not like an appraisal does with three properties and making dollar adjustments based on physical differences in bedrooms or square feet.

Since an AVM is “blind” the standard appraisal method just cannot work.  So we pull “like” homes using 18 months’ of sold data.  (Don’t worry, we trend adjust values to today’s values.)  Then using not only the physical characteristics (that’s what Zillow does) but our proprietary text analysis system we examine all of the descriptions’ and inclusions’ importance toward value using a process called random-forest-regression.  We look for particular text terms which correlate highly between each and the end sale price.

Essentially we are valuing each home based on the emotional impact of key features of the home via the text analysis.  We can then offer the user a dollar value estimate and allow them to experiment with other potential values by comparing the key terms.  What they’ll find is that higher priced homes have a greater number of emotional triggers (the key terms) than their home, whereas lesser priced homes have lesser numbers of key terms.  It’s a great tool for the user to instantly understand what creates differences in value in their own neighborhood.

Using this same system in reverse allows a buyer to simply find any home they really like, click a single button, and the system uses the same kind of analysis to instantly find homes much like the subject based on key emotional triggers.  No more searching solely by price or bedroom count—but instead by the emotional triggers they really are looking for in a home.

We’ve actually not officially launched to the public yet, and have held back licensing the software to brokers as we are starting negotiations with three of the major portals and one very large franchise company.  So we have done zero promotion of the software.  In fact I’m a bit surprised by the number of inquiries we’ve had since we’re really told no one about the software.

In about two weeks the REalMARKABLE.com site will be using the full features and have public display of the functions and output.  The software is fully functional right now, but the MLS data is really terrible and we keep having to fix many problems in the data downloaded from the IDX.  As the most recent example, we are finding in the data from the MLS each neighborhood having up to fifteen different names—completely different names.  I was looking at a single city block with seven completely different names in the subdivision field as manually input by the brokers.  So we are creating a new algorithm to accommodate some very terrible MLS data.  We expect this fixed and able to feed the REalMARKABLE site in about two weeks.

You can view some others’ questions at http://qvalue.net/qvalue-buyer-search-tools/ and http://qvalue.net/qvalue-using-mls-descriptions/

Additionally below are links to some “help” videos to be used at the REalMARKABLE.com site.  In lieu of the live REalMARKABLE site being up, these will give you some idea of how users’ will understand and use QValue.

Pricing is on the website here http://qvalue.net/buy-qvalue/  but until we determine if we are going to sell or license the software in one giant move to one of the big portals or franchises, it would not be fair to open sales with individual companies quite yet.  Unfortunately working with very large companies takes time in their decision process, so it may be a few months before any decision is reached.

I’m sure you’ve already seen the overview description at the QValue.net site, but here’s the direct links http://qvalue.net/what-is-qvalue/ and http://qvalue.net/lets-talk/

Thanks for your interest.  I will be happy to let you know as soon as the REalMARKABLE site is live so you can test it out.

Creed Smith

creed@QValue.net

800 W 8th Avenue #103

Denver CO 80204

303.906.6915

 

From: [removed]
Sent: Saturday, February 07, 2015 9:45 AM
To: creed
Subject: Re: QValue Contact form submission

Trying to understand exactly what this is. Is there a couple of websites I can look at? Cost? Is it essentially an idx + avm? What kind of results are your clients seeing with it?

On Saturday, February 7, 2015, creed <creed@qvalue.net> wrote:

Hi [removed], what questions can I answer for you?

Creed Smith

creed@QValue.net

—–Original Message—–
From: [removed]
Sent: Friday, February 06, 2015 9:09 PM
To: creed@qvalue.net
Subject: QValue Contact form submission

Subject: QValue Contact form submission

This e-mail was sent from a contact form on QValue (http://QValue.net)

QValue™ using MLS Descriptions

Q) I am a real estate agent in [removed] that has aspirations of opening up my own brokerage.  I understand what you are discussing when it comes to “what buyers want,” but my question has to do with what data you are relying on.

A) Hi [removed], I know that you clicked through from the QValue site, but I am not sure if you are referring directly to information only there, as I also have recent articles on Inman News (inman.com) and DemonOfMarketing.com on this subject.  So bear with me and I may cover more than you really want to know J.  I promise that I will answer your specific data question in a moment, but I want to cover a little background first.

Q) It seems to me, and please correct me if I am wrong, that your search still relies on what agents enter into their local MLS.

A) It does and I can see your question coming—and I can tell already that you are right.

Q) Assuming that is correct I believe that it presents a large problem.  I have read countless descriptions (remarks) and reviewed everything that agents include in their listings…and it isn’t good.

A) Excellent observation and that is even more important that you may realize.  And by the way, you are now one of an extremely few brokers to realize how important the descriptions are for both valuing and finding a home.

Q) Generally the only way to truly understand what a home offers is to review the pictures and/or physically tour the home.

A) Very good.  I tried to find software that could help me interpret pictures and our need is ahead of where that kind of technology is right now.  At best I could have someone develop custom software, and with an estimated training set of about 100,000 pictures, they felt about 80% sure they could predict what room we were looking at.  And you don’t even want to know the cost of that.  So yes, interpreting pictures is out.  Obviously viewing each home is where we have been at for decades—not very efficient and has a habit of burning out buyers, sellers, and brokers.

Q) So my question is, how can your system provide what you claim it can provide IF agents aren’t providing the necessary information on the initial MLS listing?

A) First let me say that you are probably too smart to stay in real estate, and secondly I am glad I don’t have to complete against with you if you do stay.  All of your observations are 100% correct.  I am assuming you are looking at the buyer side tool, but I will touch on the value side tool also.  Please bear with me as I give you some background then will absolutely answer your question.  You will think this is just too much information, but I promise it’s about 1% of explaining the how and why of my crazy system.

  • Everything I’ve created is based on interpretation of market actions.  Each valuation (or buyer search) is custom created live.  This is important as different characteristics of a home (those bad descriptions) have wildly varying swings in impact (cherry cabinets in a $900K home has little impact or correlation to value, whereas in a $150K home it has a huge impact).  So I extract what both the typical physical characteristics and the emotional impact characteristics have on value.  This is done via a process called random-forest-regression, RFR.  As the research at QValue demonstrates the impact of a bedroom can be huge in one area and hardly noticeable in another, so that’s why it is a custom process for every home.
  • Zillow uses RFR also, but they only use physical criteria (square feet, beds, baths, etc).  Where that leaves them is offering a value, then a pretty sizeable spread in value (a high point and a low point which covers their 95% confidence level).  What creates that spread in values are what I am trying to extract and interpret with the brokers’ bad descriptions.  But you can’t measure just the value of each characteristic (say cherry cabinets); you have to measure the emotional impact of those cherry cabinets.  So if they cost $10K to purchase—that’s not their value.  In the $900K house they add much less than $10K value toward the home’s marketplace value; in the $150K house they may add more than $10K in value.  The value is not in the physical object, but the emotional impact of the object.  I use the RFR to complete a custom valuation for each home and it looks for the impact stuff like this makes.
  • The buyer tool uses this same information, but kind of in reverse.  All they have to do is find any home they really like and click “find more”.  My system uses the emotional impact of key terms of the subject home to automatically find homes with a similar impact.
  • So now I’ve made it really apparent how much my system is reliant on bad broker descriptions; you are very correct there.  While we do use the actual text descriptions and any kind of inclusions from the MLS data, we use that as a comparison tool.  I had to create a custom dictionary or lexicon of key impact words used in real estate.  I also had to “tokenize” them, meaning I numerically keyed them so: 1) the computer could use them, and 2) to match similar words.  So our cherry cabinets may be token 1000.  I had to manually prime the pump a bit by telling the computer what key terms have similar meaning.  A quality cherry cabinet is pretty similar to a quality maple cabinet, so now they are both token 1000.  However, a builder grade oak cabinet is not equal so it may be token 1005.  This allows the system to “interpret” and use many varying descriptions that mean similar things.  So this helps our bad description problem quite a bit, as most text analysis software has to have a perfect match of words to function.  The tokenized terms help to match similar words and expand the dataset for buyers as it did for sellers.
  • Oh, and this one is really important.  Unlike a standard appraisal type valuation I don’t grab three comps and run a comparison.  I use every home that is essentially equal (within set tolerances) to the subject.  This means I have a much greater pool of text terms to draw from.  With the greater number of terms and using the tokenizing system, we can build out the base of information for each analysis.  Thus even if one home in the pool is particularly weak in its description, there may be others quite well written.  We are pooling and equalizing that pool of terms via the tokenization process.
  • Additionally on the value side of using the bad descriptions I have a really unique method of filling in the gaps using the list price.  However that one I can’t disclose quite yet.  Perhaps in about two weeks.  But my system anticipated the brokers giving me low-grade information and compensates for that.
  • So finally, I have in place several means to accommodate bad descriptions—but it is not perfect.  It will improve as the broker descriptions improve.  But why would they?  I mean right now the brokers do not realize how important the key text terms are.  So here’s part of the risk of using QValue.  Right now it’s not perfect, but it is better than anything (anything including Zillow) out there.  In just a few weeks I am beginning to release more and more specific information on the system to the press.  (I am quite sure Inman will run with it, as others may.)  Over time I expect that as buyers and sellers find out how important this information is they will either demand higher quality descriptions from all brokers or will only want to hire those brokers who offer such quality.  This alone will be a very strong point as you interview with sellers.  But it is a risk: will the market adapt to a smarter tool?  A decade ago, maybe not—but they sure jumped on the Zillow AVM then.  The real estate industry has changed and we are 100% out there on the internet.  Sellers and buyers are there and getting smarter about everything every day.  The entire industry is starving for new tools better meeting the needs of the marketplace.  I mean Zillow went from $0 to $5 billion just on one innovation, their AVM when no one else offered such.  Every innovation in technology started with less than perfect information and circumstances.  And I hate how bad the realtor data is; as I know better information means my system works better.  But that’s also where the opportunity is.  If everybody knew this already then you and I would not be talking.  This is a big risk—but wow, what happens if the market adapts to it?  And if they don’t, well you’re still the smartest guy in your market.  Would you want to compete against you for a listing knowing how the marketplace really works?  People can sense someone who’s smart and on their side over a stamped-out salesman.

Sorry about this tragic length.  It really is about 1% of the entire project presented here, but was crazy enough you may never venture to email me again :)

Here’s a couple of videos that may help take my 10,000 word email and make it more comprehendible.  These will be used shortly on the REalMARKABLE.com site—which is a whole other story on innovation.  Each screen has a custom video helping the user with their most likely questions.  There’s no “how to use” or “FAQ” stuff there—just an instant video on each screen offering the user help if they desire.  So you’ll be seeing these out of context, but they may be helpful anyway.

Thanks for your potential interest.

QValue™ buyer search tools

Q) Good Morning Creed, Thanks for the timely response, I guess that’s what email is all about. I am currently travelling out of the country might be easier to email. I am really interested in your thoughts regarding buyer search tools, I agree that you need to provide the buyer with more information than just bed/bath count and should include lifestyle/demographic info for them to be able to formulate an opinion regarding desirability but where do you get it ? and how do you package it so that it can be a self serve platform ? Thank you for taking the time with this.

A) So here’s my take on what kind of search tool is really useful to home buyers. I apologize now for saying so much, but I think understanding why I am doing certain things is as important as to what I am doing. And I promise this is still only about 1% of the philosophy and strategy behind what I am doing.

Let’s start with why someone buys a home and what creates value to them, as this will help you to understand the design and function of the search tool.

[Removed], as you know a home buyer typically starts off on day-one with emotionally charged high-expectations of finding their perfect home. Then after trudging through 10 or 50 of them over 30+ days’ time they become quite less excited. Why? I mean they have chosen from homes which all “meet” their needs pertaining to location (give or take), square feet size, style, price range, bedroom count, and bathroom count. Yet they struggle to find “the one”.

Well they struggle as they are using antiquated search tools based on what programmers thought would be easy to define parameters (square feet, price, beds, baths). But no one falls in love with square feet. It’s the form, flow, and finish—the quality of the home that gets them excited. But “quality” s far more than the materials themselves; “quality” is how well the characteristics of the home meet their personal desires. But wait, I am about to take you to a more ethereal level, sorry.

You know that buyers, forced to use the industry’s bad search system, walk into the 44th home and instantly light up knowing this is the home. You’ve seen it happen; everyone in the industry has seen it happen. But what really happened?

So run in place really hard for five minutes then hold your breath as long as you can; now you’re in the semi-conscious state needed to understand how I think a buyer falls in love with a home.

Your buyer instantly knows this is the one because there are certain emotional triggers in the home causing them to visualize future life events there. They instantly visualize these events in a flash somewhere between conscious and subconscious levels and immediately reap the emotional rewards as if the events have already occurred. Hopefully you were still holding your breath so that all made sense.

Okay, here it comes: buyers fall in love with the emotional benefits of life events yet to occur based on the emotional triggers present in a home (form, flow, finish). They also subconsciously value a home based on these same emotional triggers.

So…why force home buyers to search for homes using tools that have nothing to do with why they buy a home? Yet every real estate website on the planet does just that.

Finally, your answer: using my search tool a buyer simply plays on the internet for a few minutes and finds a home they think is really cool—just what they want. Using a proprietary lexicon we then use emotionally charged key text to find other homes with those same triggers. We don’t ask the buyer to list, define, or rank what they are looking for—that’s a bad strategy and a burden to them. Just let them come across a home they really like and find more much like that one for them.

Please remember, they are buying the emotional benefits of future life events, not a bedroom count. So we hold in the lexicon (proprietary dictionary) a list of key emotional triggers. We take the description and inclusions of each home, match that to the lexicon, and then search out homes with similar emotional triggers.

We score the series of homes based on the emotional triggers, and also how well the properties correlate to the needs for bedroom and bathroom count. We rank them from highest to lowest and present them on a map, also controlling for distance. We set an acceptable tolerance to present the top ten homes, and sometimes the top twenty if there are a lot of good matches. We ignore the lower scoring homes to avoid feeding the buyers another list of homes really not meeting their emotional desires.

Oh, using standard demographics (age, income, ethnicity, etc) are just about as bad of a search tool as forcing a buyer to search by square feet. Search engines based on demographics are pretty meaningless to home buyers. Just think this through: if you have a 65 year old buyer desiring the urban loft lifestyle and they pull down $250K per year in income, they don’t care—or perhaps they even desire, that many of their neighbors are 30 years old and make $50K per year. They aren’t buying a home based on some series of government tracked demographics; they are buying the emotional benefits of visualized future life events. However school rankings may be quite important to a buyer—as they visualize the emotional benefits of a successful child. So we always let them search via a particular school if that is what they desire.

Self-serve platform: I will explain this one and then mercifully give you your freedom from my own insane opinions. This whole project started eight years ago, which means designing my search tool (entire website really) for optimal use on smart phones is really crazy. So everything you will see shortly functions optimally on a smart phone—thus the very minimalist design. On tablets, laptops, or desktops it looks exactly the same, just bigger.

The site is set up without a help menu or FAQs. Instead each screen has its own video designed to answer the user’s most probable questions. I have linked up four videos here that I think help to answer your questions on “self-serve platform” (they are stored on vimeo). Now you will be seeing them out of context as you are not on the site using the screens, but I think you can pick up how the “find more” function is displayed and I want to include some stuff on valuation, as my AVM uses the same emotional triggers to value homes.

So I hope it’s a long flight home so you had time to read all of my ranting. Thanks

Zillow Killer

Dear Real Estate Franchises, You are in far more trouble than you know. And it’s not even Zillow’s fault, but I’ll tell you how to kill them before they drain all of your life-blood out.