When Bots Change Their Minds

By Dave Fratello | December 31st, 2018

The automated home valuation... people love it and hate it.

The "Zestimate" helped build Zillow by offering a tantalizing window into what your home is worth, and what your neighbor's is worth.

Following that example, the onetime darling little upstart Redfin built a "Redfin Estimate" valuation formula and slapped it on active listings and off-market properties alike.

We have a new revelation about the Redfin Estimate today.

Did you know they can erase history?

It's as if the bots can simply change their minds, and hide their tracks.

(Image here is from this classic Ren & Stimpy cartoon. Enjoy.)

Lest anyone think we're piling on Redfin, we'll remind you that we've taken on the Zestimate in past years, trying to see how accurate Zillow's formula tends to be in the real world of Manhattan Beach.

In sum, Zillow was less accurate in 2017 than in 2014, mostly estimating values within 10% of sale prices. Not very useful. (Here's our 2017 summary of Zillow's performance, and our 2014 summary.)

This year, due to one specific listing, we've focused more on Redfin's tool.

1426 Marine Avenue Manhattan Beach CAThat specific listing is 1426 Marine Ave. (2br/1ba, 840 sqft.).

We will stipulate here that we wish the sellers success in finding a buyer for their property, now asking $1.299M after a purchase just $20K lower at $1.279M in March 2017.

We reference this property not because we have any issue with it, but because Redfin was involved in the 2017 purchase and a failed 2018 listing, and along the way, certain facts about Redfin's automated valuation system have become apparent.

Back in April, we learned for the first time that Redfin can suppress automated valuations on properties that the firm is listing for sale. (See "Redfin Can Hide Inconvenient Estimates.")

This was cause for a kind of forehead-slap, because of the way Redfin has built a reputation for transparency and for pushing all the data out there. To be fair, though, Redfin's people were open and honest when asked whether they can and do suppress Redfin estimates for their clients.

Yet now, we have discovered another quirk in the Redfin estimate: It can rewrite history.

Take a look at 1426 Marine now on Redfin (12/31/18), and you'll see both a current estimated value and a 5-year history of the property's value.

The bots think the property should sell today for $1,278,841, about $20K less than asking price. (And $59.00 less than Redfin helped the owners buy it for.)

But the image we've excerpted here is focused on something else: The estimated value of $1,178,580 as of April 2018.

That time of year is when Redfin was listing the property for $1,499,000, and suppressing display of the Redfin Estimate.

Here's where the story gets interesting.

Here at MBC, we already posted a story about what Redfin's bots thought the property was worth when Redfin was listing the property. (See "Now Redfin Reveals Its Estimate, After Losing Listing.")

It was only possible to see the prior valuation because a local agent had taken over trying to sell the property. But Redfin was showing a much higher value at the time of our last post on this topic.

In mid-November 2018, the "estimate history" showed that in April 2018, Redfin's estimated value for 1426 Marine was $1,371,020.

Just take a look at the two images above from Redfin's display. Same property, same basic timeframes on display.

But the April 2018 estimate is now lower by $192,440 (-14%), less than 2 months later. How's that?

Also, take note of the big dollar-sign markers on the line. The second, in each case, shows the March 2017 acquisition ($1.279M).

Waaaaaay back in November, the Redfin Estimate took that acquisition price as the actual value at the time.

Now, Redfin's bots would suggest that the buyer (who used Redfin) paid as much as $180K too much at the time.

In sum, the history has changed here, and not in a way that is remotely flattering to Redfin.

Did Redfin help a buyer pay 10% too much, then list the property for 27% too much, according to its own algorithms?

The real point here is that you can't take that "history" seriously.

Redfin's display of a time graph suggests that they've got a database somewhere tracking the value of properties over time, recording those valuations and making them available on demand.

If the estimated value at a given point in time can change by almost $200K within weeks, then it's clear that's not really a "history" at all.

Instead, Redfin's bots must be re-generating a "history" based on a different set of comps each time the listing is called up for review.

The latest is questionable for a number of reasons, not least of them the odd suggestion of a much lower value for March 2017 and for the idea that the home has risen in value by $100K since April.

Oh well. It's the internet.

Everything's new each day, as if history didn't exist.

Just ask a bot.

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