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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

#201

Post by gozur88 »

colordrops wrote: post #67
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 entren…

My neighborhood is the opposite. Zillow will value a house at, say, $650k and it sells for $520k. It's not the condition of the house, either, since it's pretty consistent.

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

#202

Post by brogrammernot »

cletus wrote: post #126
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 just went and tried this. The Zestimate for my place is... ludicrous. Probably 30% below market value. What's more, similarly sized apartments on the same floor vary by 15%! I'd always thought this number was dumb but wow. This is even more ludicrous than I could've believed. How can it be this far off with apartments with recent sales history in a building with lots of unit (and thus lots of sales activity)? Could…

Highly unlikely. You do not cause this level of pricing swings in an A/B test. Additionally, A/B testing this much of a price swing heavily discounts the value of the tool.

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

#203

Post by abritinthebay »

openmosix wrote: post #136
_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…

This totally reminds me of https://www.xkcd.com/1831/

The first thing I thought of when that comic was posted was HN threads

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

#204

Post by BeetleB »

encoderer wrote: post #190
BeetleB wrote: post #43

Earlier quoted context omitted.

>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…

You think estimating the value of every home in the country within 10% is bad? Lots of criticism of zestimate but I'm curious: is anybody doing AVM better and for free?

>You think estimating the value of every home in the country within 10% is bad?

It may be good from an "interesting problem" standpoint. But if your house's Zestimate at $300K, 10% means it's real value is somewhere between $273K and $334K.

Not very helpful, is it?

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

#205

Post by dtrizzle »

razwall wrote: post #159
chasing wrote: post #157

Earlier quoted context omitted.

I imagine if you offer your opinion about the price in a professional context where your opinion can affect the actual value of the property then you might have to follow some rules. If you drive by a house and say "this house doesn't look like it's worth shit" you're probably not going to wind up in court after someone complains that said house is worth quite a bit more than shit and you're driving the price down. L…

Actually this has come up before with a similar law in Arizona, where the state tried to ban Zestimates. Volokh's analysis basically agreed with me ( http://volokh.com/posts/1177792494.shtml ). Though I couldn't find any info about what ultimately happened with that case.

I'm pretty sure the Arizona legislature changed the law to make it clear that Zestimates were lawful. http://supreme.findlaw.com/legal-commentary/must-zillow-the-...

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

#206

Post by wyattpeak »

michaelmrose wrote: post #193
devoply wrote: post #186

Earlier quoted context omitted.

They should be more transparent about their algo though. That would then allow users to actually know how they came to the conclusion that they did. Hopefully this lawsuit will reveal that algo.

Why would the lawsuit force them to reveal trade secrets? I don't see how you have any right to know how they arrived at the number they did. I can say publicly that I value your home at $5 and my neighbor bob can say its worth a million dollars. These are both opinions and anyone seriously considering spending half a million or more can consider spending a modest amount on an appraisal.

There's a difference between an opinion proffered by a neighbour and an opinion from a large real-estate company.

The reality is people do trust the site, so law should take that into account. If a situation is making life harder for actual people, the fact that their behaviour isn't economically rational is not a good enough reason to ignore the problem.

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

#207

Post by pravda »

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…

>This law as it's written has got to be unconstitutional.

...and certainly as it is applied here, to a 'zestimate'.

I predict Zillow will make a motion to dismiss on first amendment grounds. I also predict the judge will grant that motion.

RemindMe! One Year

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

#209

Post by tssva »

razwall wrote: post #159
chasing wrote: post #157

Earlier quoted context omitted.

I imagine if you offer your opinion about the price in a professional context where your opinion can affect the actual value of the property then you might have to follow some rules. If you drive by a house and say "this house doesn't look like it's worth shit" you're probably not going to wind up in court after someone complains that said house is worth quite a bit more than shit and you're driving the price down. L…

Actually this has come up before with a similar law in Arizona, where the state tried to ban Zestimates. Volokh's analysis basically agreed with me ( http://volokh.com/posts/1177792494.shtml ). Though I couldn't find any info about what ultimately happened with that case.

There was never an actual legal case. There were just cease and desist letters with threats of a case. Before any actual legal case could materialize the law in AZ was changed to allow automated appraisals without certification as long as no money changed hands for the appraisal.

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

#210

Post by Mathnerd314 »

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…

> nor does this Act apply to the procurement of an automated valuation model. "Automated valuation model" means an automated system that is used to derive a property value through the use of publicly available property records and various analytic methodologies such as comparable sales prices, home characteristics, and historical home price appreciations.

If that sentence applies, I don't think they really have a case...

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