
Zillow CEO Overpaid for His Los Angeles Home, According to Zillow - prostoalex
http://la.curbed.com/2016/7/11/12157338/zillow-ceo-brentwood-home-zestimate-overpaid
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JimmyAustin
Is it really fair to judge their algorithm on "one of the most expensive sales
of 2016"? Only a tiny, tiny portion of the half million houses sold in the US
each year would be even approaching the 20 million USD mark. His service isn't
intended to service the mega rich.

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nsxwolf
It is intended to depress the net worth of middle class homeowners.

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JimmyAustin
Never assume malice when a shitty model will suffice.

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justratsinacoat
Sufficiently advanced shittiness is indistinguishable from malice.

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nostromo
The model was off by 5%.

Sounds like a pretty good estimate to me, particularly considering the paucity
of back data for this kind of inventory.

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venomsnake
Those kind of ultra lux purchases are closer to the art markets than to the
commodity housing ones. So - it is actually pretty good.

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janesvilleseo
I live in the Midwest and our home prices are relatively flat over the last
decade for the city I live in. 18 months ago I noticed that my zestimate was
inflated and rose to 2x my appraised value of my home (refinanced that year).
I looked into it and noticed that Zillow was doubling the sales price of
recent homes. This was the main issue. I reported it to Zillow and some in
customer service said their engineers would look into it. Only in the last few
months have th Zestimates come back to reality.

I bring this up because I was curious as to how this would play out for my
city and home prices. Would this increase prices for the area or would
realitors ignore the data and go with what they knew would make sense.

I haven't seen a huge increase in prices nor have a done any study of it. But
just the idea that a bug could cause such a calamity for a least the size of a
city was eye opening.

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qxamak
I have a friend who is a realtor and we talk about this subject occasionally.
My understanding is that most realtors will recommend using Zillow to "get a
feel" for the market. But Zillow's estimates are only as good as the data that
goes into them. Usually, data for an area is publicly available and up-to-
date, but sometimes it's very old or just plain wrong.

I think Zillow claims their estimates to be within 10% of actual sale price.
To me, that figure seem to be pretty good from a data analysis stand point;
but 10% of the value of a house is a lot of money for even a modest home.

Most realtors used closed databases, like MLS, to document sales and compare
area housing prices. I believe MLS data is typically manually entered and
verified (I'm not 100% sure about this though). I believe there is also a lot
of extra metadata added to MLS listings that Zillow can't get from public
records. Realtors also tend to look at property tax assessments for their
areas in order to gauge market trends (just like Zillow does, except without a
hidden algorithm).

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tylercubell
It's not surprising that Zillow's AVM [1] isn't accurate for this sale. The
model needs local comparable sales data to function properly which it didn't
have in this case; it's not everyday that mansions are bought and sold. The
next best thing it can do is look at the last recorded sale (or tax assessor's
indication of value) and project out by looking at market trends and applying
some other proprietary mumbo-jumbo to come up with a price.

[1]:
[https://en.wikipedia.org/wiki/Automated_valuation_model](https://en.wikipedia.org/wiki/Automated_valuation_model)

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carlmcqueen
I didn't realize people actually cared about zillow zestimates. I'm not trying
to be mean, I love Zillow as someone too introverted to go to open houses but
still curious what the inside of homes look like around me.

I live in a city (stl) where less than one mile north are houses <30k and less
than a mile west re >1m and one block east are 150-200 and one block west are
500k.

Whenever houses sell around me my zestimate goes nuts but we have a smaller
house in the middle of 100+ year old 4k square foot homes. They sell for
either MUCH higher prices (someone kept it up) or much less (they didn't)
causing our estimate as a unrelated newer home to go haywire.

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jrochkind1
I would never expect an algorithmic prediction of property prices to do well
on a very unusual ("one of the most expensive sales of 2016") property.

Zillow's estimates in general may or may not be useful -- and personally, i'd
be awfully interested in finding out more about their (presumably proprietary
secret) algorithms. But "one of the most expensive sales of 2016" is not a
good example to say anything about how the algorithm functions in general.

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tunesmith
I don't see how a model is supposed to accurately predict a house's _selling_
price when in many markets people look at those estimated prices and add a
percentage.

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eru
What do you mean? If there's an easy way to improve on the accuracy of the
estimated price, by eg adding a percentage, shouldn't you just bake that
simple way into your model in the first place?

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tunesmith
recurse.

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eru
If the recursion converges, just take that price as the output of your model?

If it diverges or oscillates: what's the point?

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myrandomcomment
So the Redfin and Zillow price of my house I purchased in Oct. 2015 is off
about 125K from my purchase price (1.125M) and misses the 400K in remodel. I
checked the houses on the same street that sold since and they are off by
200-400K from the ASP. To be fair I live in Los Gatos in Silicon Valley and
the housing prices are crazy stupid. Anywhere else in the US the house would
be 400-500K.

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cwilkes
Or you could have the situation a couple of blocks from me: 1920s remodel that
was awesome in the inside sold for $850k. Crappy 1940s house with one owner
for 40 years (and it shows) is Zestimated to be the same price as they have
the same stats in square footage and bathrooms. They are listing for a
reasonable $575k.

Zestimates are a complete joke. They can complain that they don't have all the
facts (but they can infer from the wording of "needs work" and "recently
remodeled") but that's like if a frog had wings it wouldn't bump its ass a
hopin.

What I don't get is that they have the data on millions of sales. Surely they
can come up with something that's not 30% off. At that rate you minus well
just guess at a price and be better off.

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gwbas1c
Because a more accurate estimate of value requires well-formed data. They
would need a good way to judge condition and other characteristics that might
require a very subtle interpretation of a listing, or might require an in-
person visit to a property.

These kinds of judgements are much more complicated than traditional machine
learning. My guess is that they are feeding easily-obtained data into a
machine learning algorithm, and quality of property, interpretation of a
listing, and viewing of pictures, is not something that's easy to feed into a
machine learning algorithm.

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JackPoach
If the CEO is overpaid himself, I see no problem overpaying for a house :)

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dlchang
Generally I find that Redfin's estimates are more accurate than Zillow's.
Zillow often is off by more than 10% compared to market prices.

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malinens
That's a nice house

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te_chris
Pity about the furnishing/interiors. What is it with rich americans having
such banal taste? Looks like a bland hotel

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dagw
Aren't those the pictures from the real estate agent? You probably want to
keep things as simple and 'blank' as possible when trying to sell a house so
that people can easily visualize their own tastes onto the house.

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busterarm
From a PR perspective this is a horrible move any way you slice it. If I were
on the board I would be fuming right now.

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brianstorms
What a pathetic example of clickbait. Zillow's zestimates are wildly
inaccurate. My own home had a zestimate for 2.5x its value. When we sold it,
we got an offer well above what it was worth, but about half the zestimate. We
viewed the deal as fantastic, and ignored Zillow. In the years since we sold,
the zestimate has fallen lower. Go figure.

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FatAmericanDev
I would only pay 5...

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somenomadicguy
Humble brag?

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untilHellbanned
$20M for Zillow CEO's home. Zillow itself loses $25 million per quarter. Well
done.

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at-fates-hands
Not really. . .

 _The company — which completed its $2.5 billion acquisition of Trulia in
February 2015 — reported quarterly revenues of $186 million, a 25 percent gain
over the same period last year. It also boosted its revenue projections for
the year to $825 million to $835 million, up from a previously stated range of
$805 million to $815 million._

Are you referencing the Move Inc legal battle?

 _In fact, the company’s litigation costs during the quarter tallied $15.7
million, $4 million higher than Zillow expected. Total loss for the quarter
was $47.6 million._

 _For the full year, Zillow expects to spend $50 million to $55 million
defending itself in the case involving Move Inc._

[http://www.geekwire.com/2016/zillow-group-
posts-25-revenue-g...](http://www.geekwire.com/2016/zillow-group-
posts-25-revenue-gain-boosts-revenue-projections-2016/)

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conradev
_Total loss for the quarter was $47.6 million._

 _the company’s litigation costs during the quarter tallied $15.7 million_

Therefore the company's loss for the quarter without the legal costs was 47.6
- 15.7 = $31.9 million.

