Zillow.com bites the wrong bullet: In preference to telling one simple truth, it will propagate thousands of tiny lies . . .

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

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…

Technorati Tags: blogging, disintermediation, real estate, real estate marketing