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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

#251

Post by stupidhn »

sidlls wrote: post #183
stupidhn wrote: post #180

Earlier quoted context omitted.

> 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.

Why do you believe that, out of curiosity? The reason I think it isn't straightforward to account for is based on several things: it isn't fungible, the purchase date can have little or no relationship to the price, and the means of purchase typically carry other time-based constraints that are also not necessarily related to price (although they can be). Furthermore, the liquidity in a given market may change fairly…

>Why do you believe that, out of curiosity?

Because the liquidity of an asset is a form of risk.

>The reason I think it isn't straightforward

I don't think it's straightforward either, but that only means individual's valuation might be way off.

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

#252

Post by tracker1 »

SeanDav wrote: post #227
michaelmrose wrote: post #211

Earlier quoted context omitted.

Zillow is a information company providing a free ballpark estimate of a vast array of properties, not a real estate company. This is an important distinction. Neither party is paying them for an accurate estimate ergo they are not obligated to provide an estimate sufficient for either buyer or seller, which is why both sides are best advised to PAY for an accurate estimate before closing a transactions worth hundreds…

Zillow, should make it very clear then that their estimates are complete works of fiction and any resemblance to actual value is purely coincidental and unintended.

Well, it's really not a complete work of fiction... it's a correlated value estimate based on previous sale, and other property sales in a given market over time based on factors of the home (size, bedrooms, bathrooms, etc)... It may well not be accurate, as there may be other features that increase or decrease value.

That said, I would posit that if you're selling for more than a 20% variance from the Zestimate, that you are probably over/under-valued for the market. Just because you have gold-leaf throughout your home doesn't mean that it'll sell for a million when all your neighbors are half that.

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

#253

Post by tracker1 »

michaelmrose wrote: post #216
tacostakohashi wrote: post #214

Earlier quoted context omitted.

What is a "real estate company", and how is it different from an "information company"? Real estate brokers and appraisers also sell information (not real estate).

When you seek the services of an agent and pay them money to help you buy or sell real estate they represent to you that they are qualified to assess the value of the real estate being bought and sold and are somewhat morally obligated to you by virtue of the money you paid them to provide you with accurate information. Professional licensing requirements are supposed to ensure they are sort of kind of qualified. Som…

The problem in Zillow's case may simply be the legal system... And that will vary greatly from state/county to state/county. The real estate market is very protective of itself.

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

#254

Post by tracker1 »

At's an algorithm based on available data... it may not be accurate, but that doesn't mean it's too wrong. Also, if you put in expensive features, doesn't mean your house will sell for twice as much in a given neighborhood. Pricing is fairly collective with main factors being property size, home size, bedrooms/bathrooms and some influence on features, namely pool, garage(s) etc.

That doesn't mean it's entirely wrong, unless there are manual tweaks happening to shape specific markets, which may be proven/disproven through discovery. Aside from that, there's the legal aspects in different states and counties in terms of what a licensed/unlicensed seller is allowed to do.

I would say that if the market is more than 20% off in terms of actual sales from the Zestimate, then there may be something up... The Phoenix market seems pretty accurate to within 5-10%, which is pretty reasonable.

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

#255

Post by sidlls »

stupidhn wrote: post #251
sidlls wrote: post #183

Earlier quoted context omitted.

Why do you believe that, out of curiosity? The reason I think it isn't straightforward to account for is based on several things: it isn't fungible, the purchase date can have little or no relationship to the price, and the means of purchase typically carry other time-based constraints that are also not necessarily related to price (although they can be). Furthermore, the liquidity in a given market may change fairly…

> Why do you believe that, out of curiosity? Because the liquidity of an asset is a form of risk. > The reason I think it isn't straightforward I don't think it's straightforward either, but that only means individual's valuation might be way off.

I'm not convinced that risk as used in this context contributes to price significantly in the residential real estate market. People in this market don't (typically) view transactions as investments and they don't view the home as assets. Lenders do, so the availability of mortgage funds may be linked to price and liquidity but I suspect that relationship is tenuous at best.

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

#256

Post by vacri »

chii wrote: post #224
vacri wrote: post #215

Here in Australia, underestimating by realty companies is the norm. I watched a friend go through buying a house last year, and some houses were advertised at prices that were below reserve [1]. As in, at auction, the bidding reached the advertised price, but the buyer's floor price hadn't been reached yet, so the house was not 'on the market' yet... [1] In one case, 80k below reserve. You know you've hit the reserve…

why don't they just say what the seller's floor price is, and start from there? seems foolish to auction at a starting price that's lower!

Starting at the reserve can spook some bidders and make it hard to start the auction. Starting below the reserve usually gets some momentum going in the bidding, and that tends to carry over to a higher final price.

Advertising a price that's below the reserve is pretty unethical, though it's not illegal (the seller is never locked into a price). People end up wasting time and money (getting reports) for houses that were never actually in their price range in the first place.

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

#257

Post by michaelmrose »

_pmf_ wrote: post #221
michaelmrose wrote: post #194

Earlier quoted context omitted.

Punish zillow for what? Seems to be a confusion between something would benefit me/may harm me and the other side having any sort of obligation to consider your position. An inaccurate estimate from someone who you paid nothing and whom owes you nothing may make your life more difficult but this doesn't imply they owe you anything.

Market manipulation is illegal. Whether or not there's a business relation between buyer and Zillow or seller and Zillow is immaterial. All the DA needs is an initial suspicion that someone related to Zillow profited from the manipulation.

What market manipulation? First we haven't seen proof that zillow's zestimate is effecting real prices. Presumably after initial research stages people have an actual assessor come in before closing.

Then you have to show that they profited from such manipulation rather than you know from ads.

It looks more like they changed their algorithm and rather than show imaginary swings in the value of homes revised their historical projections. This makes tons of sense if you understand the historical data to mean this was what the property was worth in 2010 as opposed to in 2010 this is what we thought it was worth.

In fact this interpretation is the logical one. Nobody cares what zillow thought in 2010 they care what the historical value was.

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

#258

Post by [deleted] »

_pmf_ wrote: post #221
michaelmrose wrote: post #194

Earlier quoted context omitted.

Punish zillow for what? Seems to be a confusion between something would benefit me/may harm me and the other side having any sort of obligation to consider your position. An inaccurate estimate from someone who you paid nothing and whom owes you nothing may make your life more difficult but this doesn't imply they owe you anything.

Market manipulation is illegal. Whether or not there's a business relation between buyer and Zillow or seller and Zillow is immaterial. All the DA needs is an initial suspicion that someone related to Zillow profited from the manipulation.

[deleted]

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

#259

Post by skj »

infinite8s wrote: post #247
tehlike wrote: post #178

Earlier quoted context omitted.

What you are talking is second price auction. Winner gets the house, but pays the price of the runner-up. I wish this existed.

Why would a seller agree to this type of auction?

To get people to be more aggressive with their bids.

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

#260

Post by Mathnerd314 »

gnicholas wrote: post #242
Mathnerd314 wrote: post #238

Earlier quoted context omitted.

Generally in law you use a law dictionary, e.g. http://thelawdictionary.org/procurement/ , which defines it as "the entire process of purchasing goods". "Entire" there suggests a broad term, hence interpreted inclusively in the context it appears. So in context it's probably something like "commercial use". But there are other questions of applicability, e.g. whether the legislature intended that sentence to only app…

In my experience (7 years as a corporate lawyer), a law dictionary would only be consulted for legal terms of art, which "procurement" is not. For most terms, a regular dictionary definition is used. At any rate, I don't see how the definition cited would clear up the matter. It's a big leap from "the entire process of purchasing goods" to "commercial use". Like "use", which I discuss above, "commercial use" is a com…

Well, I was trying to shift the focus to "automated valuation model". That's used in other places and seems to be a term of the art in finance, e.g. this Kansas consumer bill: http://kslegislature.com/li_2016/b2015_16/measures/documents... Hence Zillow probably doesn't qualify, since it doesn't do loans or banking.

But the courts are so random; I'm guessing this case will be determined primarily by how much the judge that gets assigned likes technology. It'll be interesting to follow up on.

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