Pinocchio wept: The map is never the territory, so even a much, much better Zillow.com clone would not be able to evaluate real property . . .
David G. from Zillow.com replied to my post yesterday which argues that Zillow.com Zestimates are bunk, which I had proved to my own satisfaction in an earlier post. I’m revisiting the topic — to everyone’s delight, no doubt — because I want to drive the point home, and because I want to illustrate how a business like Zillow.com could do a better job — which would nevertheless still fall short of Zillow.com’s fraudulent promises.
I’m going to draw from a few places. This is David G:
So, why is it inappropriate to comment on your “debunking Zillow” series? Well, frankly, I think you’re entitled to your opinion and I respect it. I may disagree with you; but how does saying that help this conversation?
I cannot for the life of me imagine how anyone could reason rigorously about the argument I made and yet disagree with it. You cannot evaluate a house without seeing it. That seems to me to be beyond dispute. I’d be amazed if Zillow.com were to admit it, but they cannot deny it.
There’s more here, of course. No one with any sense at Zillow.com would buy or sell a home without a professional opinion of value.
But give the man credit. He doesn’t deny the truth. He just doesn’t quite admit it:
In many respects, I actually agree with you; Zillow does not replace visiting a house and its comps or a strong knowledge of the local market.
On the other hand, take a look at these promises, made on Zillow.com’s home page:
What is Zillow promising if not “knowledge” of the values of homes it has never seen?
Do you think this is ambiguous? This is from the Zillow.com “About Us” page:
Why not help consumers by giving them access to the same kinds of information and tools agents use?
Do you get the impression that what is meant here is “visiting a house and its comps or a strong knowledge of the local market”? I don’t.
David G. again:
Also, I find your argument applies equally to any AVM.
AVM is Automated Valuation Model. And David is 100% correct. All AVMs are equally fraudulent if they claim to evaluate houses, which we have by now all agreed cannot be done without seeing them.
But wait. David doesn’t really agree:
These tools have been used by Realtors for ages and so, an opinion that AVM’s are not useful is obviously bunk but I don’t see the value in trying to convince you otherwise.
This is a mare’s nest of fallacious arguments. Realtors do not use AVMs to produce opinions of value. To do so would be malpractice. I have not said that Zillow.com is useless, merely that the epistemological underpinnings of it and every other form of AVM forbid the claim that real estate is being evaluated. Real estate is evaluated by a rigorous objective process that includes but is not limited to an on-site inspection of the property. If a lender elects to use an AVM — the only time I ever see them used dispositively on the ground — that lender is making an informed professional decision. To market AVM statistics as though they were an appraiser’s or a broker’s opinion of value is fraudulent, the deliberate gulling of a gullible public.
That said, Zillow differs from (most) AVM’s in two respects; it’s free and it’s available to consumers. Now, if you have a problem with “free” or with empowering consumers, you are entitled to that opinion too and yes, I’d disagree but I would not comment.
Straw man fallacy, essentially Realtor-baiting. In any event, Zillow.com does not “empower” consumers. It knowingly deceives them.
Easy question: Is there a way that Zillow.com could placate me?
You bet. All they have to do is put, in big red letters at the top of their home page, “For entertainment purposes only!” They won’t do this, of course, but the funny thing is, it wouldn’t make any difference. People who understand how knowledge is and is not acquired already know that Zillow.com is a hoax. And those who don’t know — or don’t want to know — are every con man’s natural prey.
But here’s a harder question: Would it be possible to do a better job of what Zillow.com is attempting to do?
Yes and no. No in the sense that a new and improved AVM is still forbidden by its methodology from making any sort of objective evaluation of real property. No matter how elaborately detailed a map might be, it cannot ever become the territory it maps.
But: A Zillow.com-like AVM can be a lot more useful and informative than Zillow.com is right now.
By doing the next thing that real-life Realtors do, immediately after they peruse the Assessor’s comps or stats from whatever other AVM they might be using — by comparing the subject property with the listings. All of the listings: Active, Pending, Sold, Cancelled, Expired. Long before Realtors ever look at the house — and long before they ever say a word to the principal about its value — they look at all the records pertinent to the subject property and to all of its comps.
Truly, I don’t understand why the dot.com entrants to the real estate profession don’t join the MLS in the markets they want to compete in. Companies like Trulia.com and PropSmart.com have cool toys to play with, but they have no inventory — in a real estate market that is awash in inventory.
A Zillow.com-like AVM that was intelligently parsing MLS listings would do a much better job of comping. First, having possession of past listings (in Phoenix, we have about 840,000 listings on-line), the AVM could identify the errors in the tax assessor’s knowledge of the property and its amenities. Second, by software it would be very easy to identify close comps and to eliminate red herrings. Finally, an MLS-parsing AVM would have access to Active, Pending and recently Sold listings, giving a much better picture of current market conditions than can be obtained from tax records.
Would such an AVM be able to evaluate houses? Absolutely not. Software cannot account for an exquisite view — or an obstructed one. It cannot tell if upgrades are appropriate or if the home has been over-improved — or utterly ruined by the very costly application of horrible taste. No matter how elaborate, software running in a remote data center cannot smell cat urine in a carpet — no matter how much I want to rub its nose in it. An AVM such as I describe can prepare a real estate professional with an excellent understanding of the possible value of the home — on paper. But the map is never the territory. No amount of carefully calculated paper will lend value to a house that has burned down, unbeknownst to the software.
I think this is a case where everyone who cares about the true value of homes — or simply The Truth in the abstract — should stand up and be counted.[…]
If we are silent when confronted with the public’s gullibility toward the Zillow.com fraud, we are complicit in that harm.
Zillow.com is a fraud. They won’t say so, but you can…