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

#61

Post by natoliniak » Wed, May 10, 2017, 9:05 PM UTC

tyingq wrote: post #51

mattkrause wrote: post #25

Earlier quoted context omitted.

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.

> value per square foot varies quite a bit in adjoining neighborhoods. And sometimes within a neighborhood

The quality or rather "reputation" of the assigned public school is probably the best predictor of this variance. The problem is that the school's reputation can diverge from the official grades, so this is difficult to quantify.

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

#62

Post by joezydeco » Wed, May 10, 2017, 9:05 PM UTC

I'd also like to know how or why Zillow lists houses that are "pre-foreclosure".

I know it's semi-public record, but that certainly doesn't help the homeowner try and recover maximum value for their property if they decide to sell.

On top of that, it's pretty unnerving when you see this pop up for one of your neighbors and good friends. Nobody should have to go through even more humiliation than they already are.

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

#63

Post by narrowrail » Wed, May 10, 2017, 9:08 PM UTC

As long as there are already many anecdotes, I'll just add mine (I've always taken the zestimate as Zillow's working model that probably needs lots of tweaking; it's not like the MLS's are eager to give them data).

Anecdote: My folks live in a golf course neighborhood where their house is not on the course, and it's smaller than the rest. However, my folks house is valued based on these extravagant golf-course side properties that are actually quite a bit more $/sqft. Zillow needs to have a human go through manually and adjust for these subtle differences, IMO.

Despite dome shortcommings, Zillow is a godsend compared to the systems local MLS's use, just the listing dates/listing removed dates/ last sold for/ days on market dates are worth a lot. Realtors can give you this info, but it is not nearly as frictionless as it could be.

Zillow is still looking for that disruptive go-to-market strategy (they already have most of the tools). But, the Realtors aren't going to give up their ~$6K per transaction fees easily. They're much more connected than cab drivers.

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

#64

Post by tyingq » Wed, May 10, 2017, 9:09 PM UTC

natoliniak wrote: post #61

tyingq wrote: post #51

Earlier quoted context omitted.

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.

> value per square foot varies quite a bit in adjoining neighborhoods. And sometimes within a neighborhood The quality or rather "reputation" of the assigned public school is probably the best predictor of this variance. The problem is that the school's reputation can diverge from the official grades, so this is difficult to quantify.

Sure, but there are other drivers that would cause different value per square foot. A house with 12 foot ceilings, granite countertops, stone floors, wainscoting, built-ins, high-end appliances, tile roof, and so on...could be 100 yards from house with the exact same square footage, and none of that. It trips up the Zestimates around here. Especially in areas with larger lots, where bulldozing the old plain ranch house and replacing it with a higher end house is common. The per-square foot values are very different.

Edit: also, near power lines, near water tower, on cul de sac, next door to elementary school, etc.

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

#65

Post by mikeryan » Wed, May 10, 2017, 9:13 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…

In some areas where houses were developed around similar times to similar plans this works.

But, for example, here in Berkeley the price per square foot can vary wildly based on the condition of the homes. We have 100 year old homes that are barely habitable next to completely remodeled ones that can sell for a difference of $200 per square foot.

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

#66

Post by ProfessorLayton » Wed, May 10, 2017, 9:13 PM UTC

At least in the Bay Area, Zillow et al. are decent for getting a decently accurate ballpark figure in mind. A lot of sale prices are clearly put up below market to grab attention, knowing that the sale price is very likely to exceed it by a wide margin.

Here in many parts of the Bay, you'll get laughed at and promptly ignored if you try and use these "zestimates" to try and put downward pressure on the price. Sellers here have many offers to chose from, leading buyers to compete not just on price, but even dropping certain contingencies to push the deal through.

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

#67

Post by colordrops » Wed, May 10, 2017, 9:14 PM UTC

strictnein wrote: post #19

The Zillow estimate used to be spot on in our neighborhood, for several years even. Recently they all plunged to 10-20% below market value, even though all sales data puts it at the previous mark. The weird thing is that they also went back and recalculated old "Zestimate" data as well. On April 2nd the estimate for our house was $617,453, which is more or less what it would sell for. It had been above $600k since Ju…

I live in a hot real estate market (L.A.), and I've spent about 5 minutes (no exaggeration) looking online at the prices of houses in my neighborhood, knowing the actual closing price of recent sales, and my first thought was that prices were about 10-20% below market value.

It's funny that this is obvious to someone like myself who has spent virtually no time dealing with real estate, let alone people heavily entrenched in the process.

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

#68

Post by linkregister » Wed, May 10, 2017, 9:14 PM UTC

narrowrail wrote: post #63

As long as there are already many anecdotes, I'll just add mine (I've always taken the zestimate as Zillow's working model that probably needs lots of tweaking; it's not like the MLS's are eager to give them data). Anecdote: My folks live in a golf course neighborhood where their house is not on the course, and it's smaller than the rest. However, my folks house is valued based on these extravagant golf-course side p…

Do you see Redfin eating a traditional realtor's lunch?

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

#69

Post by tyingq » Wed, May 10, 2017, 9:16 PM UTC

BeetleB wrote: post #43

_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…

>And 20% is a huge error. Even 10% off is huge for most people.

Found a screenshot that on nerdwallet that shows some of that for Zestimates in a few large cities: https://assets.nerdwallet.com/blog/wp-content/uploads/2015/1...

Basically showing they are only within 20% of the actual sales prices ~80% of the time. That's pretty lousy.

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

#70

Post by thaumasiotes » Wed, May 10, 2017, 9:16 PM UTC

geppeto wrote: post #15

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.

The government's not getting involved, oh you mean the fact that a judge is going to be involved? Civil courts exist to provide monetary damages if damages can be proved to exist. Yes, they can also compel arbitrary behavior as a part of governing body. This is independent of any stance on Zillow and a state licensing regime. If the plaintiff can convince that the tool is making her lose money, the judge will award h…

Nonsense. For the judge to award your money to a complainant, they need to have a loss and you need to be legally liable for the loss. The fact that they have a loss is not itself a cause of action. The fact that you caused the loss is still not a cause of action.