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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

#171

Post by mehwoot »

averagewall wrote: post #162

Sounds like an opportunity for arbitrage that would correct the problem. If "house flippers" start using these low prices to make a quick buck, either Zillow or homeowners are surely going to cotton on and things will settle back down to fairness.

But what could a homeowner do about it? If Zillow makes your house look a lot less than what it's worth, so nobody wants to buy it for the proper price, you can't do anything. That's exactly what this lawsuit is about.

They're not even suing for money right now, they just want the price for their house fixed so they have a decent chance at selling it.

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

#172

Post by razwall »

gnaritas wrote: post #169
razwall wrote: post #137

Take a look at the law they're suing under, regarding licensing of real estate appraisers ( http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=02250... ). It makes it illegal to "develop a real estate appraisal" without a license. An appraisal is defined as simply "an opinion of value". So if you are driving down the street and say to your spouse, "Look at that house, it's gotta be worth a million bucks," you jus…

> So if you are driving down the street and say to your spouse, "Look at that house, it's gotta be worth a million bucks," you just committed a misdemeanor. No, but if you try and sell your opinion to make money that's when you're very likely crossing the line. An appraisal is something you pay for or make money from; opinions are not.

That might be your opinion of what the law should be, and I wouldn't disagree with that opinion, but it's not what the law says.

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

#173

Post by bane »

simonhughes22 wrote: post #166

I have had both our homes (we rent one out) independently estimated and both are worth 25-30% more than the Zestimate. I live in IL like the realtor in the article. Zillow is consistently lower than other sites. The most accurate estimates for our home are on Redfin, which is almost perfectly inline with the appraiser's estimates. Zillow has a pretty overfit model IMO.

I have different problems. Zillow's estimate is about 15% higher than Redfin for us. But there's also issues with the facts each have about our home. Zillow's estimate also goes up and down by tens of thousands of dollars per week. Some weeks it'll be as much as a $40,000 swing.

Keeping the data correct on the sites is also a chore, and if I don't keep on top of both sites, entire rooms or bathrooms will come and go, square footage will change and so on.

Real estate agents will claim that appraisers don't go off of these sites, but buyers will use them as pricing information so it almost becomes critical for home owners to police these sites to get as favorable an estimate as possible.

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

#174

Post by paulgb »

CobrastanJorji wrote: post #155

> Zestimates are within 20 percent 89.7 percent of the time, Zillow claims. So, for an area where the homes average around $500,000, more than 1 in 10 estimates are off by $100,000 or more? That seems kinda bad.

Do humans do any better, I wonder? That seems pretty good for an illiquid market. (But what do I know, I've always rented)

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

#175

Post by cmurphycode »

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 know it seems weird to have the "old" data change. But, it's not observed data, it's estimates made at a point in time. The estimate comes from the property itself as well as the algorithm. If they changed the algorithm, do you think it would be better to recalculate the old values, or show a huge swing in your home value, implying some sort of market trend or issue with your house? If I were implementing it, I think I'd have to change the old data. I'd like to think I could sneak in an explanation / comparison, but that might get nuked for usability/UI reasons.

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

#176

Post by ccvannorman »

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…

If true and you can prove it, this may be valuable information in prosecuting Zillow for some pretty illegal and perverted stuff. I hope you will share this information with someone who can punish Zillow for this.

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

#177

Post by [deleted] »

WaxProlix wrote: post #148
djrogers wrote: post #143

Earlier quoted context omitted.

The properties in GP's post are not likely to be sold at auction - very few homes are sold that way in the US. The 'bidding war' referred to is a standard listing/sale that receives multiple offers. If the interest is high enough, the seller may counter all of the offers and reveal the highest price, forcing the bidding.

Even without revealing the highest offer, the offers themselves constitute a silent auction, which is where a lot of the information asymmetry comes from. If I could speak to each of the other people and tell them I had X amount to spend we could all agree to walk away or make offers without going through a bunch of hassle and (for 32 of 33 offerers) heartbreak. The process really highlights to me how broken certain…

[deleted]

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

#178

Post by tehlike »

WaxProlix wrote: post #148
djrogers wrote: post #143

Earlier quoted context omitted.

The properties in GP's post are not likely to be sold at auction - very few homes are sold that way in the US. The 'bidding war' referred to is a standard listing/sale that receives multiple offers. If the interest is high enough, the seller may counter all of the offers and reveal the highest price, forcing the bidding.

Even without revealing the highest offer, the offers themselves constitute a silent auction, which is where a lot of the information asymmetry comes from. If I could speak to each of the other people and tell them I had X amount to spend we could all agree to walk away or make offers without going through a bunch of hassle and (for 32 of 33 offerers) heartbreak. The process really highlights to me how broken certain…

What you are talking is second price auction.

Winner gets the house, but pays the price of the runner-up. I wish this existed.

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

#179

Post by tehlike »

WaxProlix wrote: post #148
djrogers wrote: post #143

Earlier quoted context omitted.

The properties in GP's post are not likely to be sold at auction - very few homes are sold that way in the US. The 'bidding war' referred to is a standard listing/sale that receives multiple offers. If the interest is high enough, the seller may counter all of the offers and reveal the highest price, forcing the bidding.

Even without revealing the highest offer, the offers themselves constitute a silent auction, which is where a lot of the information asymmetry comes from. If I could speak to each of the other people and tell them I had X amount to spend we could all agree to walk away or make offers without going through a bunch of hassle and (for 32 of 33 offerers) heartbreak. The process really highlights to me how broken certain…

toomuchtodo: I am not sure if i would call it "true" value. The true value is what you'd get if you were to sell it again. Maybe at that same day, which sounds to me like the runner-up bid.

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

#180

Post by stupidhn »

sidlls wrote: post #81
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.

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.

>Such models would have to take that into account

I believe the liquidity of the asset is inherently taken into account in the price at which the exchange is made.

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