What if - Zillow is right?

Update 25 February 2021

I was right, too. Zillow is now setting the purchase price based on the Zestimate. (archived: 2021)

Got a press release this morning from Zillow — well, Zillow’s PR agency — that the Zestimate is now the offer price from Zillow Offers. Rich Barton talked about it during the most recent earnings call, but a mere days afterwards, here it is:

“For 15 years, homeowners and home shoppers have come to rely on the Zestimate as an essential first step. This exciting advancement demonstrates the confidence we have in the Zestimate and the lengths we are willing to go to make selling your home truly seamless and easy,” said Zillow Chief Operating Officer Jeremy Wacksman. “This is a proud moment for Zillow’s tech team and speaks to the advancements they’ve made in machine learning and AI technology. Zillow is transforming the way people sell and buy homes. Presenting the Zestimate as a cash offer to qualifying homes up front will save time, reduce friction and provide greater transparency – getting us closer to our vision of helping customers transact with the click of a button.”

Here’s the accompanying video that was released along with the announcement:

I realize that the ZDS brigade will immediately freak out, especially about “transaction with the click of a button.” That is, of course, nonsense… but unlike other moves that Zillow has made recently (ShowingTime?), this one has the potential to really change things.

Sellsius° *(defunct blog) identifies several of the “unzillowable” aspects that affect home values (and prices) (no longer available) and I couldn’t agree more.

Bloodhound continues his assault on Zestimates

and –

Zillow Blog wonders how close is “close enough?

Yet I have been wondering – what if Zillow’s reach becomes so great, their data become so vast and inclusive, that their Zestimates significantly impact what is fair market value? What if the purchasing and selling population refer to Zillow as the end-all, be-all estimator for their homes’ valuations? What if “close enough” is “good enough”? What if they become the de facto standard for home valuations?

Perfection with regards to a property’s valuation is a fluid thing, a moving target dependent on the “right” buyer who is ready, willing and able.

Can their data aggregation ever mitigate and/or minimize sufficiently the potential impacts of those unzillowable features (no longer available)? Doubtful, but they may be able to minimize the impact of the data’s shortcoming, provided they are accurate elsewhere. Might Zillow become just another tool used by Realtors?

Shoot, they’ve only been around for a very short while! Some MLS’ still publish MLS books, for goodness sakes! I don’t think that we have seen data aggregation of this volume, publicly available before, and any conclusions made now about its efficacy are premature.

From the Long Tail, p. 217: