All y'all looking at Zestimates

[MrSquished]

as I have mentioned before here, and to any potential client I speak to, and as any decent realtor knows, Zestimates are junk when it comes to reliability. I appreciate like in any business, there are many crappy realtors, but to think an algorithm could be reliable in accurately figuring out a home's worth was just silly. It fails to take in so many things into account that only boots on the ground can do. A good realtor is 100X better than Zillow at figuring out what a place is worth.

Zillow plunges 25% to lowest since July 2020, after company exits home-buying business

Analysts slashed their ratings on Zillow on Wednesday, a day after the company said it will no longer buy and sell homes because of unpredictable pricing.

www.cnbc.com

"Zillow shares plummeted 25% on Wednesday, after the company announced plans to exit the home-flipping business because of an inability to accurately predict housing prices.

Once a pandemic winner due to its central position in the red hot housing market, Zillow has lost-two thirds of its value since February and is trading at its lowest in 16 months. The stock dropped $21.63 to close at $65.57.


While its core internet marketplace continues to grow and produce cash, Zillow reported a third-quarter net loss of over $328 million on Thursday, all tied to its instant buying, or iBuying, unit....

....Barton said the company has learned that it can’t sufficiently trust its pricing model, so it’s best to exit before jeopardizing the whole enterprise."

 

[brianmanahan]

i stopped looking at zestimates, they're too depressing

and the few houses for sale in my area are priced at or above the zestimate amount, so nobody's buying

nobody seems to be moving... houses for sale are just people trying to cash in on the crazy prices

 

[IronWing]

Zillow estimates have been comically bad since they started. During the bubble that popped in 2008, Zillow estimated my plain vanilla 1960s three bedroom ranch tract house was increasing in value at the rate of $9k/week. There was a lot of new construction in my area with giant stucco piñatas being puked up all over the place. The price on these stupid-sized houses lifted the mean price in my zip code so Zillow applied that lift to my house. No consideration for square footage at all.

 

[MrSquished]

Zillow estimates have been comically bad since they started. During the bubble that popped in 2008, Zillow estimated my plain vanilla 1960s three bedroom ranch tract house was increasing in value at the rate of $9k/week. There was a lot of new construction in my area with giant stucco piñatas being puked up all over the place. The price on these stupid-sized houses lifted the mean price in my zip code so Zillow applied that lift to my house. No consideration for square footage at all.

Square footage should be a solid criteria, but one among many. Zestimates don't consider layout. Is that 3rd bedroom really usable as a bedroom or more like an office? If it's a 2BR are the bedrooms separated or next to each other? They don't consider if the street is a double yellow line but still kinda quiet or if it's really busy, they don't consider if the backyard is really sloped or the driveway super steep, they don't consider how well were updates done, were they done tastefully, they don't consider if there is walkability to certain stores/areas of a town, I mean I can go on and on and on. All these factors are things people consider. I considered them, my family members and friends considered them, clients consider these things.

 

[KillerCharlie]

I know someone who has been with Zillow from the beginning (employee #~10). Like most tech companies (Facebook, Google), they're just advertising agencies in disguise. All of their money was coming from agents and lenders advertising on their site. The Zestimate was just to draw in users to the site - similar to how Google maps is used to create a target audience for ads and collect user data.

I'm most surprised that they trusted their "algorithms" and dumped that much money into it so early

 

[nakedfrog]

What about RedFin?

 

[MrSquished]

What about RedFin?

Do they have a pure algorithm based piece estimator? I know they have something where they take a really low commission but they do use a physical human being

 

[nakedfrog]

Do they have a pure algorithm based piece estimator? I know they have something where they take a really low commission but they do use a physical human being

I have no idea how their estimator works, but they have the same deal where they project the sell price.

 

[MrSquished]

I have no idea how their estimator works, but they have the same deal where they project the sell price.

Then it's going to be a very hit or miss, and much more miss than hit, type of situation. Of situation. If you don't have an experienced agent on the ground running comps and coming to physically look at the place, you will not get the best price estimate. Estimate. No algorithm can take all the factors into account that buyers do when they try to buy a home.

 

[nakedfrog]

Then it's going to be a very hit or miss, and much more miss than hit, type of situation. Of situation. If you don't have an experienced agent on the ground running comps and coming to physically look at the place, you will not get the best price estimate. Estimate. No algorithm can take all the factors into account that buyers do when they try to buy a home.

Eh, I don't think agents have been much better in the current climate, and the weirdness in the current climate is what Zillow shot themselves in the foot with. Not that I'm complaining, they damn well deserve it.

 

[njdevilsfan87]

Realtor / Zestimates / Redfin : 1.19 / 1.24 / 1.39

Redfin is a bit high, but otherwise a pretty accurate range for my property based on recent home sales. As a home-owner none of it really matters though. It's not like you can go flipping your primary residence. The only important thing is that I'm no longer chasing this insanity.

 

[dullard]

Zillow gives just about the same estimate as any realtor on the ground using comps, because they end up using the exact same comps. A realtor can adjust it slightly up or down, but realistically, that is just noise. In all my real estate dealings with myself, my wife, and my family, Zillow has been just as inaccurate as the Realtor's estimate.

What Zillow actually failed at was predicting the huge boom then bust, labor shortage, and materials shortage due to a pandemic. I doubt many realtors predicted that properly either.

 

[ponyo]

Home flipping is hard labor intensive low margin business. It was a mistake for Zillow to mess with it.

I never placed much weight on Zestimate numbers. I thought it was neat but I tend to look at public selling records. Most people still start their initial house search on Zillow. That's a powerful position to be in and as long as Zillow can keep that lead as the go to site for home search, they will be fine.

 

[MrSquished]

Zillow gives just about the same estimate as any realtor on the ground using comps, because they end up using the exact same comps. A realtor can adjust it slightly up or down, but realistically, that is just noise. In all my real estate dealings with myself, my wife, and my family, Zillow has been just as inaccurate as the Realtor's estimate.

What Zillow actually failed at was predicting the huge boom then bust, labor shortage, and materials shortage due to a pandemic. I doubt many realtors predicted that properly either.

Zillow just looks at data in a vacuum. A good realtor will look at data and all the variables of the home on the ground. There are a lot. It's currently impossible for an algorithm to see what an actual human can see. Comps are a big part of the process but are still just part of it. You can't be 30--50K off by just using data on let's say a 500K home. That's nearly 10% of the sale price and if you are a flipper, that's a huge chunk of your profit, and if you are 50K off, that house might just sit on the market too.

 

[feralkid]

Just a little fyi:

https://www.realtor.com/advice/buy/what-is-a-realtor/

 

[Red Squirrel]

I like to look at what's in my area for fun, but I don't have any intention to move. Once I build something on my new 40 acre property I may want to downsize my home here though to try to save on taxes/other bills as my new property would be my primary residence where I would keep everything I own, do hobbies etc, so the house in town would just be a place to sleep between shifts when I'm working. Don't think it would be worth it though, probably keep my current house as it's almost paid off anyway. Could get a room mate too to help cover some of the bills like the property taxes at least. If I got rid of the server room (all that stuff would be at my new property) I could also make an actual apartment in the basement. I think you need permits for that and it opens up a whole can of worms though so probably not worth it.

It's crazy though, a bit over 10 years ago when I was looking for a house I considered a condo and actually went to see one. They were asking around 200k which I felt was too high for a condo. I put a low ball offer but they declined so I left it at that.

A condo in that same building (they are mostly all the same) just sold for over 300k recently. 300k... for a condo. You barely even have a yard. Houses in new subdivisions are going for like 400k now, it's crazy. I bought mine for 165k 10 years ago. So yeah probably not worth selling this house to downsize even if I do end up spending most time at the new homestead.

Though if I want longer like 10-20 years maybe I'll be able to sell my house for like a million then I can just live off that money and won't even need my job anymore, then I don't even need any place to live here, I'd live at the homestead full time.

 

[Exterous]

It's been within 5% for my comps and appraisals. But our house is relatively straightforward in a relatively newly developed area (an old house is one built before 2008)

 

[JEDI]

as I have mentioned before here, and to any potential client I speak to, and as any decent realtor knows, Zestimates are junk when it comes to reliability. I appreciate like in any business, there are many crappy realtors, but to think an algorithm could be reliable in accurately figuring out a home's worth was just silly. It fails to take in so many things into account that only boots on the ground can do. A good realtor is 100X better than Zillow at figuring out what a place is worth.

Zillow plunges 25% to lowest since July 2020, after company exits home-buying business

Analysts slashed their ratings on Zillow on Wednesday, a day after the company said it will no longer buy and sell homes because of unpredictable pricing.

www.cnbc.com

"Zillow shares plummeted 25% on Wednesday, after the company announced plans to exit the home-flipping business because of an inability to accurately predict housing prices.

Once a pandemic winner due to its central position in the red hot housing market, Zillow has lost-two thirds of its value since February and is trading at its lowest in 16 months. The stock dropped $21.63 to close at $65.57.


While its core internet marketplace continues to grow and produce cash, Zillow reported a third-quarter net loss of over $328 million on Thursday, all tied to its instant buying, or iBuying, unit....

....Barton said the company has learned that it can’t sufficiently trust its pricing model, so it’s best to exit before jeopardizing the whole enterprise."

damn it.. i should have sold my house to Zillow earlier this year.
let them figure out what to do with my furniture, ,dishes, old clothes, boxes that i havent look in for years, etc.

the only thing i would have taken is my computer.

damn it...

 

[BarkingGhostar]

The POS next door they bought for an absurd amount will never be recovered. I saw mold people over there last week for two days trying to cleanse the home because it was turning off potential buyers. They are better off burning it to the ground.

 

[dullard]

Zillow just looks at data in a vacuum. A good realtor will look at data and all the variables of the home on the ground. There are a lot. It's currently impossible for an algorithm to see what an actual human can see. Comps are a big part of the process but are still just part of it. You can't be 30--50K off by just using data on let's say a 500K home. That's nearly 10% of the sale price and if you are a flipper, that's a huge chunk of your profit, and if you are 50K off, that house might just sit on the market too.

The problem with your idea is that Zillow usually is NOT off by $30k to $50k on a $500k house. Their median error is 1.9%, which would be $9500 on a $500k house. https://www.zillow.com/z/zestimate/

The true key comes down to a data point that isn't disclosed in that link. Are the values:
(A) 1.9% too low, in which case Zillow makes $9500 more per flip than planned
(B) 1.9% too high, in which case Zillow makes $9500 less per flip than planned
(C) Some too low and others too high, in which case this error roughly balances out.

What is your median absolute value of error from listing price to selling price?