Zillow.com bites the wrong bullet: In preference to telling one simple truth, it will propagate thousands of tiny lies . . .
By: Greg Swann,
Phoenix Real Estate,
Post Archive,
RSS FeedPosted: Wednesday, September 20th, 2006, 7:34 am MST
Category: Blogging, Enduring Interest, Marketing, Real Estate, Zillow.com
Here’s a simple fact, one of the most important reasons why homeowners need professional representation to market their houses: Diogenes himself could not find an objective seller. It’s not enough to detail everything that’s wrong with the neighbor’s homes, the more important job, in a listing appointment, is to tell the Realtor why this home is worth much more than mere facts would indicate. The average American is slightly above average, and the average American bathroom remodel is worth tens of thousands of dollars more than you ever might have guessed.
This is to be expected. It’s simply not in our nature to discount for subjectivity where we are most in need of such a discounting. My kid’s smarter than your kid, and Helen herself is but a shadow to my best-beloved. This is only too human.
So: Zillow.com has a problem. People treat its silly Zestimates as though they were appraisals, even though anyone should know they can’t be appraisals. You could say caveat lector, but readers of Zillow.com’s web site have to dig pretty deep to find any caveats. What they find instead are big type and goofy pictures entreating you to… treat its silly Zestimates as though they were appraisals…
There is an obvious solution to this problem: Put up a disclaimer in even bigger type that says: “Ahem! A silly Zestimate is not an appraisal, which cannot be done without an objective, on-site inspection of a property.” That would be honest, and it would be sufficient to advise Zillow.com users that an Automated Valuation Method cannot reliably establish the value of real property.
This they will not do, possibly because it would cause those users to wonder why the hell they’re bothering with a tool that is admittedly useless. So rather than admit the nakedly obvious truth, Zillow.com has elected instead to propagate thousands of tiny lies.
In a comment posted here on September 1, David G. from Zillow.com broke this news:
Lastly, just a heads-up that we’ve decided to let homeowners edit and publish corrected home facts on Zillow.
That shoe finally dropped last night. Rich Barton, Zillow.com’s chairman and CEO, made the announcement on their weblog:
Homeowners can now add remodel information, update or change facts (like beds/baths, square footage, etc), or add more specific stuff like a waterfront view, finished basement, or type of parking. This is a milestone release for the company as it represents our first step in opening Zillow up to our customers, inviting them to add to and improve Zillow for everyone.
Two reminders: First, the alleged impetus for starting Zillow.com was the unreliability of the pricing information Zillow’s founders were getting in their own home searches. And second, homeowners are epidemically subjective about the value of their own homes, compared with the those of their neighbors. Those two points serve as context for this:
I just became the first homeowner to publish in the Zillow database. I uploaded my version of my home’s facts and published My Estimate of the value of my home to be presented next to Zillow’s Zestimate. I can see many reasons why homeowners would want to update the public record home facts that we have on Zillow with data that the homeowner knows to be current. However, my personal reason is that my house happens to be for sale right now. I hear all the time from sellers who tell me that buyers are using Zillow to check out their house, but that the public record facts are not up to date. They want to update the database with the real information.In my case the public records say that my house has 2.25 bathrooms, when there are really 3.5. Zillow now presents my facts side-by-side with the public record facts. Additionally, I was able publish My Estimate of my home’s value letting any prospective buyers know that we remodeled 2 bathrooms, added a home office and a laundry room, and did a basement remodel including a wine cellar. I also picked what I think are the most appropriate comparable home sales for calculating the value of my house. I chose to make this estimate public and now Zillow presents My Estimate right next to Zillow’s Zestimate.
I imagine there are many sellers and other homeowners out there with the urge to “remodel” their home as it appears on Zillow. So, I encourage you to find your house on Zillow right now and set the record straight. Play with My Estimator to come up with a more refined value estimate — and save it, email it to a friend or publish it for all to see.
So Zillow.com tacitly admits that its version 1 epistemology was inherently fraudulent — not wrong in what it did, but wrong it what it represented itself as doing. And rather than admit the obvious, it chooses to ladle comedy upon calculation by layering on a far worse epistemological error — subjectivity — and subjectivity from the most biased possible source. What a tangled Web 2.0!
Dustin Luther at Move.com smells an elephant in the room:
Voila! Zillow now has a verified address from a person who is motivated to have their home shown in the best possible light (probably because they are getting ready to sell!) Most agents (and likely even Welcome Wagon) would be happy to pay a premium for each and every one of those addresses…
Dustin also maps out what looks to me like a logistical nightmare, but, in the end, I don’t care.
As an AVM, the best improvement Zillow.com could make would be to form a triumvirate with Yahoo.com’s other real estate partner, Prudential. This would give it access to most if not all MLS systems in the U.S., which in turn would result in Zestimates as accurate as a Realtor’s Comparative Market Analysis — minus that Realtor’s on-the-ground knowledge of the territory. This is the best they can hope to do, given what they are. Adding the subjective biases of homeowners, no matter how inconvenient this might be for a data-processing company, is a move in entirely the wrong direction.
But: All of this is eclipsed by the overriding issue, which becomes even more glaring in the light of this “innovation”: No matter how you tweak it, a silly Zestimate will never be an appraisal.
Pinocchio is real, never doubt it. He’s just not a real boy. Get used to it. And, for god’s sake, stop lying about it…
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Related posts:22 Comments so far
Hey Zillow is “appraising” my property $20,000 more than my county. Damn cool!
[...] (Edited to add a link to the Greg’s post at the Bloodhound where he perhaps said it better). [...]
[...] It's all over the web, Zillow allows you, the home owner, to set the record straight about your house. You can now go onto Zillow.com and input any updates about your home real or imagined. Wow, is this going to create a mess of unreliable data, ah well, Zillow's data has never been reliable anyway. Read more about it at BloodHoundBlog . It's just smoke and mirrors, smoke and mirrors. I think Zillow is just building up to a Redfin type model. First, they are going to watch Redfin screw everything up, goes under, and then does it better. [...]
[...] Bloodhoundrealty (you have to give him credit for his consistency) [...]
[...] So the problem/arguement is that the zestimates are innacurate, as well as some other issues like propagating lies. So I guess zillow sees the cause of their inacuracy to be a data entry problem. So their solution is to let homeowners make adjustments to their own property, as the homeowner knows the property best, and that data will go into zillows database. [...]
[...] The issue to some is, Zillow implies, if not outright states, that its data can be used to calculate independent and trustworthy “zestimates” (registered trademark), or appraisals, of property values. [...]
[...] However, some people don’t like Zillow’s concept, and although adding user-submittable data may be an improvement, Zillow’s prices should not be considered as an appraisal. Greg Swann agrees; he’s against the site as a whole because its questionably accurate Zestimates are giving buyers what could be interpreted as a property’s actual worth. Sellsius is in the same boat: the “real word of Real Estate” requires the opinions not only of the owner and market data, but also of the broker and an appraiser. They, as well as the Charlottesville Blog also note that some owners may want to leave a low Zestimate (or push to raise their Zestimate) for other reasons, be it taxes or some other questionably ethical reason. On a related note, Zillow also has a “Google Gadget” that allows for you to see the Zindex for an area in your Google Personalized Page. It’s a neat concept… (Also noted on TechCruch. Don’t know much about Zillow? Check out this BusinessWeek article.) [...]
[...] September 20th, 2006 by Kevin Zillow-bashing is a favorite pastime in the real estate blogosphere, second only to its cousin Redfin-bashing. The Zillow bashers have (at least) a triumvirate of beefs with Zillow: 1) Its raw data is suspect 2) Its home-valuation algorithm, even if it were based on good data, could not possibly lead to an accurate Zestimate because it doesn’t, and can’t, consider non-quantifiables like views, amenities, smell, etc. 3) To protect consumers from over-reliance on a Zestimate, Zillow’s home page should have a big, bold disclaimer about 1) and 2). In an effort to address 1) above, Zillow today announced that home owners would be able to “wikifi” their home’s data if necessary. So is Zillow’s raw data (mostly from county records, I believe) really that bad? The results are in from a quick, highly unscientific study comparing Zillow’s data on 10 random properties in Menlo Park, CA, with local MLS records. The county got 6 properties completely right. Of the remaining 4: [...]
[...] September 22nd, 2006 by Kevin Hats off to the Zillow team for adding some ridiculously “z-addictive” features to their offering! The real estate blogosphere is abuzz with comments, some relatively positive and some negative. [...]
[...] September 20th, 2006 by Kevin Boer, Alain Pinel Realtors Zillow-bashing is a favorite pastime in the real estate blogosphere, second only to its cousin Redfin-bashing. The Zillow bashers have (at least) a triumvirate of beefs with Zillow: 1) Its raw data is suspect 2) Its home-valuation algorithm, even if it were based on good data, could not possibly lead to an accurate Zestimate because it doesn’t, and can’t, consider non-quantifiables like views, amenities, smell, etc. 3) To protect consumers from over-reliance on a Zestimate, Zillow’s home page should have a big, bold disclaimer about 1) and 2). In an effort to address 1) above, Zillow today announced that home owners would be able to “wikifi” their home’s data if necessary. So is Zillow’s raw data (mostly from county records, I believe) really that bad? The results are in from a quick, highly unscientific study comparing Zillow’s data on 10 random properties in Menlo Park, CA, with local MLS records. The county got 6 properties completely right. Of the remaining 4: [...]
[...] September 22nd, 2006 by Kevin Boer, Alain Pinel Realtors Hats off to the Zillow team for adding some ridiculously “z-addictive” features to their offering! The real estate blogosphere is abuzz with comments, some relatively positive and some negative.In this post, I’ll describe what I found, and in the next one, I’ll provide some commentary on what impact I think these features will have on the agent community and the general public. While you can continue to use Zillow as before without registering, you do need to get a Zillow account before you can use some of these new features. Once you’ve done so, you search for a property… [...]
[...] Zillow.com has a problem. People treat silly zestimates as though they were appraisals.. (yes, he said that. It gets eerie later, so look for it.) [...]
The Zillow site is absurd - inner city minority neighborhoods are particularly victimized - even when the property is not minority owned. As an example the 90007 zip code between University of Southern California and the Staples Center - the USC mansion at 2653 S. Hoover - at about 4300 sq. ft. is zillowed at $898,138. It is completely remodeled and in a prime location - probably worth two million.
[...] “Example - Home listed this spring for $60,000 more than Zillow said it was worth. Sold full price. 2 months later this home was still off base. Now the same home Zillow says is worth $20,000 more than it actually is!!” “Zillow has helped me! After someone checked the value of their home they called me and I told them it was worth more and got the listing which sold quickly. Thanks for the inaccuracies zillow! Keep it Up!”Everybody is talking about Zillow these days. Greg Swann over at the Bloodhound blog has a great post today that basically describes the Zillow experience as “in preference to telling one simple truth, it will propagate thousands of tiny lies” [...]
[...] My first thought was that this would be a great tool for Real Estate Agents that would like to track all the homes in their prospect farm. But that’s of little use to me. But then I thought of a way for mortgage brokers to use it. nnnnMyZillow allows you to make “estimates” of what a property is worth. The estimate takes Zillow’s data and adjusts for specific information you know about the home. Then they generate a monthly email letting you know what those values are doing, while adjusting for your estimate. nMortgage Brokers are in a unique position to make these estimates in a way that real estate agents cannot. Every time a broker does a refi, they can use the appraisal to work up the estimate to match the real value. Then you can save that estimate in MyZillow. You get a monthly report on that homes value. Now you know about how much the home has appreciated, and how much of the mortgage is likely paid off. With this data, you have a pretty good idea of your existing client base’s equity, and can market to them accordingly. nBased on this information, you could send out reminders that they may have reached 80% LTV, and should look into getting their MI dropped. Or, you could send out offers on HELOC’s, or Cash Outs. Yould could give them a heads up that properties are dropping in their neighborhood. Whatever you do, it’s just another way to help keep in touch with past (and hopefully future) clients.nMore on Zillow today atnRain City | John Cook | Sellsious | LOTECH | BloodhoundBlogn [...]
A month ago, zillow had the correct square footage for my house. Today, the Zestimate has gone up but the square footage is now 400feet less. Amazingly inaccurate. It also says my house is now a brick house(guess that’s why the estimate went up!).
So they made the data worse? And I’m supposed to correct this? You know buyers will use this against buying my house. I think they had the about-face and let user-entry to fend off possible lawsuits. I mean their data is dead wrong. And they updated good data with bad data.
zillow said my house was worth less than upgrades demanded instead their just using tax assesment records. Not really fair judgements of apraisels. Wouldn’t you say????
> Wouldn’t you say????
Repeatedly.
Oh GREAT!! A recipe for disaster just add:
1 Cup — Of 20% rebate that is infuriating the agents at Zip Realty and forcing any good agent to leave within 24 months.
2 &189; Cups — Of Zestimates that are off by as much as 50%
Bake for 2 years and you have created a business model that pays you to buy a home 30% over market value
The icing on the cake is that when I worked at Zip Realty they sent us emails to fwd to our clients with actual statistics of how Zillow was soooo far off on their estimates.
I’m an agent and have had clients use Zillow… The average zillow estimate is off by as much as 15-20% in Las Vegas. How can you do and appraisal in 30 seconds? You cant, you need to see the interior of the home and add or subtract for upgrades, pool, remodel, etc. The site is a joke…. So is Zip Realty… A match made in cyber hell.
Also see the “whats wrong with Zip Realty” blog on this site.
Think about it, if they join together… they can minipulte their estimates to be what ever they want. The agents at Zip can already do this… its called a CMA and they use the data to thier best interst…
[...] More on Zillow today at Rain City | John Cook | Sellsious | LOTECH | BloodhoundBlog [...]
Great article couldn’t agree more. Zillow is just a tool for sellers in the beginning of the sales process eventually most sellers will hire a pro.
In my opinion, the Zillow Zestimates are seriously flawed. Since Zillow doesn’t reveal the algorithm for open scrutiny, we can’t evaluate where the flaws are kicking in. That, in itself, is cause for concern.
We’ve been following this over at the UCR Sloan Center for Internet Retailing, and so far, Zillow doesn’t have a very good answer to the discrepancies.
See for yourself: http://sloan.ucr.edu/2008/03/09/why-are-zillow-zestimates-so-wrong/
Professor Donna L. Hoffman
UCR Sloan Center for Internet Retailing