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

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

#51

Post by tyingq »

mattkrause wrote: post #25
_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…

If you want to try it, there are a few data sets kicking around, including a) https://www.kaggle.com/c/house-prices-advanced-regression-te... b) http://www.bis.org/statistics/pp_detailed.htm c) https://archive.ics.uci.edu/ml/datasets/housing If you had a really great model, you might be able to make some money with it--find underpriced (per the model) houses, buy them, and then try to sell them at the model's price.

I imagine it's tricky because value per square foot varies quite a bit in adjoining neighborhoods. And sometimes within a neighborhood. And neighborhoods aren't necessarily well defined geographically. And, some neighborhoods go long periods of time without any houses being listed or sold.

So the whole idea of "comparable sales" is shaky.

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

#52

Post by _m8fo »

mattkrause wrote: post #25
_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…

If you want to try it, there are a few data sets kicking around, including a) https://www.kaggle.com/c/house-prices-advanced-regression-te... b) http://www.bis.org/statistics/pp_detailed.htm c) https://archive.ics.uci.edu/ml/datasets/housing If you had a really great model, you might be able to make some money with it--find underpriced (per the model) houses, buy them, and then try to sell them at the model's price.

That might be a good project actually. Try to predict previous houses prices from historical data. A retrospective analysis would be fun since you know what the "right answer" is and can adjust your model accordingly.

It seems this and predicting the stock market have some similarities, but I think real estate is less volatile.

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

#53

Post by Uhhrrr »

AndrewKemendo wrote: post #41
_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.

In my case I'm pretty sure a horrible yellow-brown shag carpet was the reason I paid less than list for my house (I removed it as soon as I got the key and was delighted to find hardwood floors underneath).

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

#54

Post by BeetleB »

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"?

>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.

I've seen how appraisers appraise, and this comment brought out a laugh.

Their estimate is really no better than Zillow's.

They spend about 15-20 minutes looking at the property. They primarily measure dimensions and look at cosmetic stuff (no "inspection" whatsoever). Then they look at comparables and make an appraisal.

I asked one of them how they handle various items in their appraisal (solar panels, etc). The answer? "I have no idea what to do with those things, so I just ignore them."

The reality is many buyers will value stuff that the appraiser just plain ignores. This causes problems because the seller cannot increase their price due to those items - when it comes time for the buyer to get a loan, the appraisal will come out lower than the sale price and the bank won't approve.

I recall when I bought my house, the real estate agent had access to the appraiser.

Lots and lots of problems with the appraisal business. I don't know how much they make, but it's a good racket to get into that requires minimal work and pays well ($400-800 per appraisal - they spend more time driving to houses than examining them).

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

#55

Post by BeetleB »

tyingq wrote: post #35
lotsofpulp wrote: post #3

Earlier quoted context omitted.

If it's not correct, then the sale price will reflect that and Zillow's reputation will take a hit. Don't understand why the government needs to get involved in what someone says something is worth, it's their opinion and they're entitled to it. Edit: It would be funny if Zillow also started putting up alerts about problems with government finances which will likely impact future taxes, such as in Illinois.

>If it's not correct, then the sale price will reflect that and Zillow's reputation will take a hit. Perhaps with that buyer and seller. I believe, though, that Zillow rewrites historical estimates when they get new data. So you can't really see how wrong they were after a sale.

They do have an Excel sheet that indicates their accuracy for each county. Eye opening.

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

#56

Post by LoSboccacc »

JBReefer wrote: post #14
jdavis703 wrote: post #8

Earlier quoted context omitted.

Since when is providing a housing estimate a regulated activity?

This is a lawyer, who can sue people at very low cost compared to the rest of us. If this is a regulated activity, it absolutely shouldn't be. This reminds me of the absurd barber regulations.

this should be. it's a market with few sales at high costs heavily interwinded with the mortgage market.

having a de facto monopoly on what's considered a fair value, rightly or wrongly, opens up bank people and real estate agents to all kind of manipulation.

by manipulating their equation they can help lowball the sales price of an entire area, they can both profit directly out of this, indirectly through stock manipulation and even cause trouble to the whole banking sector devaluing mortgadget properties

the housing sector is very, very delicate.

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

#57

Post by vineet »

_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…

Here is a company that is focusing on just that - estimating real estate values (and selling those estimates): https://www.housecanary.com/

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

#58

Post by tyingq »

BeetleB wrote: post #55
tyingq wrote: post #35

Earlier quoted context omitted.

>If it's not correct, then the sale price will reflect that and Zillow's reputation will take a hit. Perhaps with that buyer and seller. I believe, though, that Zillow rewrites historical estimates when they get new data. So you can't really see how wrong they were after a sale.

They do have an Excel sheet that indicates their accuracy for each county. Eye opening.

Current accuracy, or full historical accuracy? I am surprised they open that kimono voluntarily.

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

#59

Post by Spooky23 »

_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…

You don't really need machine learning to do comps. There are literally dozens of tools to do this accurately.

Zillow just sucks for a variety of reasons that have more to do with Zillow than anything else.

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

#60

Post by wuliwong »

malandrew wrote: post #42
_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 b…

Usually this is mitigated by the appraisal. Lenders generally aren't willing lending more than a home is appraised for because of the increased risk. I'm sure this varies from state to state but I think this holds mostly true in general. That being said, the appraisals themselves are quite subjective and only based off a few similar properties sold recently, so I still agree it's a difficult problem.
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