Zillow iBuying loss: a 6.9% Zestimate error versus thin margins
Why did Zillow Offers lose over $500M if the Zestimate was a decent model? The episode argues the AI did its job and the company changed the job. A 6.9% median error suits homeowner advice but exceeds an iBuyer margin of about six percent. The winner's curse meant Zillow bought the homes it overvalued, accuracy was measured on the wrong homes and timeframe, and Project Ketchup added overlays while telling pricing experts to stop questioning the algorithm.
Listeners leave able to apply a napkin rule: error on deals you win plus price drift while holding must be smaller than your margin, or the…
The skinny
The skinny isn't ready yet — notes appear once the transcript is processed.