Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth • Hacker News Board

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#41

Post by AndrewKemendo » Wed, May 10, 2017, 8:42 PM UTC

_m8fo wrote: post #16

You would think real estate would prove to be one of the few real life fields where machine learning would be able to predict the prices pretty accurately. You have: 1. List price 2. "Favorites" on the MLS. 3. Square footage 4. Bedrooms 5. Bathrooms 6. Sold price for nearby properties 7. Sold price for nearby properties relative to their list price And the list goes on... Is it that difficult to predict? Literally th…

Except appraisals include much more than what you listed there which typically needs to be seen individually on a case by case basis and isn't public data. For example looking at if a sink is leaking.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#42

Post by malandrew » Wed, May 10, 2017, 8:45 PM UTC

_m8fo wrote: post #16

You would think real estate would prove to be one of the few real life fields where machine learning would be able to predict the prices pretty accurately. You have: 1. List price 2. "Favorites" on the MLS. 3. Square footage 4. Bedrooms 5. Bathrooms 6. Sold price for nearby properties 7. Sold price for nearby properties relative to their list price And the list goes on... Is it that difficult to predict? Literally th…

There are also non-tangibles like knowing your buyer and how much you can get from them.

My mother passed away last year and I handled the home sale as I was the executor of the estate. The buyer was a neighbor who heard about my mother passing away and saw it as an opportunity to buy the house for so his mother could live less than 100 meters from him and help him and his wife with raising their kids.

He knew we'd be eager to sell and thought he'd get a deal, but I realized that the reason for him wanting my mother's house was because it was ideal for his particular circumstance. This buyer was a real estate agent in my mom's office (she was also a real estate agent). At the end of the day, I got about $40k premium over the appraised value (almost ~10% premium) just because I knew I had a motivated buyer.

Situations with motivated buyers and sellers happen all the time and adds a lot of volatility in sale prices, and is a confounding factor that I would expect to really complicate machine learning approaches to appraising the value of a home.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#43

Post by BeetleB » Wed, May 10, 2017, 8:45 PM UTC

_m8fo wrote: post #16

You would think real estate would prove to be one of the few real life fields where machine learning would be able to predict the prices pretty accurately. You have: 1. List price 2. "Favorites" on the MLS. 3. Square footage 4. Bedrooms 5. Bathrooms 6. Sold price for nearby properties 7. Sold price for nearby properties relative to their list price And the list goes on... Is it that difficult to predict? Literally th…

>And the list goes on... Is it that difficult to predict?

They do likely have a ML algorithm in the background. They even offer an Excel sheet where, for any county, you can see what % of sold homes are within, say, 20% or 10% of the Zestimate (it can be quite bad). And 20% is a huge error. Even 10% off is huge for most people.

What is hard to capture:

1. Condition of the house 2. Design of the house 3. Color of the house 4. Neighbors being annoying 5. Alignment of incentives for both party's real estate agents. Both profit more from a high price.

And so on.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#44

Post by mr_tristan » Wed, May 10, 2017, 8:45 PM UTC

You can find estimate calculators from various banks, realtors, etc. I just did a basic google search and checked out estimates from Zillow, Chase, and RE/MAX, and they range from 4% under my home price to 11% over. That's a pretty crazy range of guesses.

My question is: why aren't these other home estimate calculators subject to being sued, then?

(And when I checked out Zillow, I noticed there was a direct link to "I disagree" next to the Zestimate. None of the other calculators had any kind of feedback mechanism.)

Seems like the journalist here forgot to mention that home estimates are pretty common and come from many different sources.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#45

Post by strictnein » Wed, May 10, 2017, 8:46 PM UTC

_m8fo wrote: post #16

You would think real estate would prove to be one of the few real life fields where machine learning would be able to predict the prices pretty accurately. You have: 1. List price 2. "Favorites" on the MLS. 3. Square footage 4. Bedrooms 5. Bathrooms 6. Sold price for nearby properties 7. Sold price for nearby properties relative to their list price And the list goes on... Is it that difficult to predict? Literally th…

I'm sure this varies by state and/or locale but one major thing missing from public data in my area is basement size, which can account for 25% or more of a house's size. Our city/county/state (not sure which one does it, really) only records above ground sqft, even if you have a walk out basement.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#46

Post by [deleted] » Wed, May 10, 2017, 8:46 PM UTC

JustSomeNobody wrote: post #32

MichaelBurge wrote: post #23

This is as ridiculous as suing Nolo for publishing law books without a license. The only reason why the government needs to have an appraisal license at all is because the government handles the loan for the house. The goal is to mitigate the risk to the government, not to help consumers decide how much they want to pay.

Or it is to minimize the number of cases that go to court with people squabling over how much something is worth.

[deleted]

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#47

Post by desdiv » Wed, May 10, 2017, 8:47 PM UTC

_m8fo wrote: post #16

You would think real estate would prove to be one of the few real life fields where machine learning would be able to predict the prices pretty accurately. You have: 1. List price 2. "Favorites" on the MLS. 3. Square footage 4. Bedrooms 5. Bathrooms 6. Sold price for nearby properties 7. Sold price for nearby properties relative to their list price And the list goes on... Is it that difficult to predict? Literally th…

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" -Upton Sinclair

Zillow has an accurate estimate somewhere in their database but it's not in their financial interest to make that estimate public. By low balling, they both gain more buyers and gain more sellers.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#48

Post by BeetleB » Wed, May 10, 2017, 8:47 PM UTC

natoliniak wrote: post #4

Interesting. I wonder what would her argument be if Zillow simply reported the City/County tax assessors estimates which are usually even lower than Zillow's.

>I wonder what would her argument be if Zillow simply reported the City/County tax assessors estimates which are usually even lower than Zillow's.

County assessors for tax purposes are explicitly not trying to determine market price. Zillow should ignore it.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#49

Post by strictnein » Wed, May 10, 2017, 8:48 PM UTC

mr_tristan wrote: post #44

You can find estimate calculators from various banks, realtors, etc. I just did a basic google search and checked out estimates from Zillow, Chase, and RE/MAX, and they range from 4% under my home price to 11% over. That's a pretty crazy range of guesses. My question is: why aren't these other home estimate calculators subject to being sued, then? (And when I checked out Zillow, I noticed there was a direct link to "…

The "I disagree" button is a lead gen for realtors, not for you to give them feedback.

Re: Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth

#50

Post by rtkwe » Wed, May 10, 2017, 8:48 PM UTC

lotsofpulp wrote: post #10

cavanasm wrote: post #5

I wonder how many other tech companies fit into this general category of "providing an equivalent to a regulated service without meeting the regulations". You've got the more obvious "sharing economy" type things which are in the news all over the place lately, but I bet there are a bunch of other companies like Zillow that have been flying under the radar for a while.

If a homeowner or homebuyer is paying someone to assess the value of a property, requiring expertise and training in inspection of a house such as materials, build quality, plumbing and whatnot, I could understand needing government approval. This is just someone saying what they they think something is worth. Do I need a license before I can say "I think a certain car is only worth $25k instead of $30k"?

There are some rules around someone saying what a home is 'worth' when we were recently buying our house the realtor had a couple tools for estimating sale price but every email with them was extremely adamant that it was not an estimate of worth because that would require a full appraisal. Maybe she was being overly cautious but it was so constant I have to believe there were some very real restrictions she was working with.