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

#81

Post by sidlls » Wed, May 10, 2017, 9:30 PM UTC

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.

Real estate markets are rarely liquid. Such models would have to take that into account, of course, and that isn't something I'd think is straightforward at all.

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

#82

Post by mywittyname » Wed, May 10, 2017, 9:30 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…

ML is the perfect application to this problem.

The big thing Zillow is missing is buyer information. I will personally value a home differently than you will because we have varying desires.

For example, I put a low value on bedrooms past the second and multiple stories, but a high value on a large garage and big kitchen. You might value things completely differently.

What Zillow should do (or maybe I should) is gather information about the buyers and calculate a personalized Zestimate that reflects what the seller thinks the actual value of the home is. As a side-effect, this approach would probably be shielded from lawsuits because it's not an appraisal, but a personalized estimate of premium over market value.

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

#83

Post by wuliwong » Wed, May 10, 2017, 9:31 PM UTC

mbroshi wrote: post #12

jdavis703 wrote: post #8

Earlier quoted context omitted.

Since when is providing a housing estimate a regulated activity?

This is from the article: "...the fact that they offer market-value estimates and 'are promoted as a tool for potential buyers to use in assessing [the] market value of a given property,' shows that they meet the definition of an appraisal under state law. Not only should Zillow be licensed to perform appraisals before offering such estimates" It can be surprising when seemingly innocuous activities are in fact heavi…

I don't believe the article is correct in the definition of appraisals.

  A valuation or an approximation of value by impartial, properly qualified persons; the process of determining the value of an asset or liability, which entails expert opinion rather than express commercial transactions.

http://legal-dictionary.thefreedictionary.com/appraisal

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

#84

Post by cwkoss » Wed, May 10, 2017, 9:33 PM UTC

mbroshi wrote: post #12

jdavis703 wrote: post #8

Earlier quoted context omitted.

Since when is providing a housing estimate a regulated activity?

This is from the article: "...the fact that they offer market-value estimates and 'are promoted as a tool for potential buyers to use in assessing [the] market value of a given property,' shows that they meet the definition of an appraisal under state law. Not only should Zillow be licensed to perform appraisals before offering such estimates" It can be surprising when seemingly innocuous activities are in fact heavi…

Why did stanford have to take the videos down?

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

#85

Post by jameshart » Wed, May 10, 2017, 9:33 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"?

So when you go to a company and ask for a bank loan secured against a car, or to insure your car against loss, you might want to have some common standards recognized by insurers or loan providers as to what constitutes a 'fair value'. You would be a bit upset if you filed an insurance claim on your car, and the underwriter came back and said 'I asked @lotsofpulp and they said your car is worth $25K instead of $30K'. You might question what credentials @lotsofpulp has to value cars.

Now, you might argue that there are market based or self-regulated solutions to that, and that's reasonable (fact is that a lot of the industry goes off 'de facto' standards for valuing cars, like KBB), but the fact is that sometimes a government regulation is necessary to prevent anticonsumer or anticompetitive practices, especially in the finance industry.

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

#86

Post by beamatronic » Wed, May 10, 2017, 9:33 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.

Common deal-breakers around here are - being on a T intersection - recent deaths in the home - Located under a high-tension power line

I don't think these attributes are accounted for in any MLS, Zillow, or Redfin database schema

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

#87

Post by wuliwong » Wed, May 10, 2017, 9:33 PM UTC

inetknght wrote: post #24

Someone fighting back against Silicon's Valley nonsensical idea of ignoring laws? This will totally end well! /s

Like someone else said in another thread. It is not clear to me that giving out an opinion as to the value of a house is illegal.

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

#88

Post by e15ctr0n » Wed, May 10, 2017, 9:34 PM UTC

Realtors have always hated the Zestimate with a passion [0]. When they publicly called out Zillow CEO for selling his own home for 40% less than the Zestimate on it, Zillow magically released a superior algorithm [2].

[0] Inaccurate Zillow 'Zestimates' a source of conflict over home prices | Feb 8, 2015 | http://www.latimes.com/business/realestate/la-fi-harney-2015...

[1] Zillow CEO sold his home for 40% less than Zestimate | May 18, 2016 | http://www.inman.com/2016/05/18/zillow-ceo-spencer-rascoff-s...

[2] Zillow Boosts Accuracy with Update to Zestimate Algorithm | June 8, 2016 | http://zillow.mediaroom.com/2016-06-08-Zillow-Boosts-Accurac...

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

#89

Post by geppeto » Wed, May 10, 2017, 9:35 PM UTC

lovich wrote: post #18

geppeto wrote: post #15

Earlier quoted context omitted.

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…

It cant just be the plaintiff proving that Zillow's tool makes her lose money, can it? If that argument was true then you could get sued and lose for reporting on facts that put the company in a bad light, like poor hygiene in a restaurant, or for competing with another company with a better product.

you have to also show up and defend yourself.

many summary judgements on flaky arguments are made just because the defendant didn't respond. the judgements are collected from you bank in any jurisdiction that will reciprocate

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

#90

Post by mywittyname » Wed, May 10, 2017, 9:36 PM UTC

lotsofpulp wrote: post #3

IanDrake wrote: post #2

The realtors I talk to hate the Zillow estimate as it typically creates an unrealistic expectation for either the seller or buyer depending on if the algorithm over or under estimates. Apparently it's rarely correct, though I live in a unique area.

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.

It's still a price anchor.

If an engineer at Zillow manipulated the Zestimate on a home they were trying to buy or sell, would they succeed in driving the price of the home in the desired direction? I think so.

Clearly real estate agents have the same feeling or they wouldn't be suing.