Zillow Gets Sued Over Zestimates by Glenview Homeseller

By
Real Estate Agent with Baird & Warner Real Estate
http://actvra.in/54Cc

As Kenneth R. Harney says in the opening of his article, "It was bound to happen . . ."

I have often wondered why someone hadn't already given it a try - they are so ripe for this even though they claim their Zestimates are not appraisals.  It's true that Zillow has an explanation that defends their numbers:  

Zillow Zestimates"The Zestimate home value is Zillow's estimated market value for an individual home and is calculated for 100 million homes nationwide.  It is a starting point in determining a home's value and is not an official appraisal.  The Zestimate is automatically computed daily based on millions of public and user-submitted data points.

In order to find this information, though, I had to dig around the website - it's not publicly published on the same page as your actual Zestimate.  

In the lawsuit, which is believed to be the first of its kind, the home seller alleges that Zillow's Zestimate undervalued her home repeatedly which caused a "tremendous road block" to a successful sale.  She claims that her townhouse was compared to newly constructed homes from a different and less expensive part of town.  Yet, within the complex there were townhouses that were only slightly larger that sold for $100,000 more.  

Her suit also alleges that since they promote a tool that potential buyers use to assess homes, they are acting as appraisers and should be licensed. Furthermore, she believes that Zillow should obtain consent from homeowners before publicly posting the numbers.

I recently had a seller challenge my price opinion based on the Zestimate which showed a hefty Zillow gets suedincrease over mine of 20%.  I explain to anxious sellers that Zillow is not a real estate brokerage, it employs no real estate agents, no one from the company ever visited Winnetka, Wilmette, Kenilworth, or any part of the North Shore in a real estate capacity.  And they certainly never stepped into a home to offer an opinion of price.

So why do people (buyers and sellers) rely on their numbers? For one, it's just plain fun, convenient, even addictive. I admit to checking the valuation on my own home occasionally.

But nothing beats "boots on the ground" - the real estate professionals who live and work in your community.  My suggested list price is based on years of experience, study and knowledge of the comparable homes, and the ability to see the differences between them.  

Zillow, on the other hand, relies on data - recent sales, tax information, and whatever other compilations they have access to.  Real Estate Decoded explains it perfectly:

"On the one hand, it's amazing that Zillow can get so close to the actual sales price just by looking at public and other data on the houses.  But on the other hand, for home buyers and sellers, the estimates are so inaccurate they're unusable for pricing homes."

And that's the gist of it - a general ballpark number is great - relying on it to make important real estate decisions is folly. For home owners in the North Shore communities of Winnetka, Wilmette, Kenilworth, Glencoe, and Northfield there are few subdivisions where homes are similar in nature.  The ages of homes here span more than a century, some have city lots, others sit on an acre or more.  There are Victorians, Prairie style, Tudors, Queen Anne, and a lot of new construction thrown in.  How can Zillow differentiate all this profoundly varied housing stock?

Back to the Glenview home seller - she is seeking an injunction against Zillow and wants them to either remove or amend the incorrect valuation.  She is not seeking monetary damages at this time, but has been approached about making the lawsuit a class action.  And while Zillow repeatedly defends their data, many in the industry are hoping this lawsuit has legs.

ADDED MAY 22, 2017:  Another Illinois lawsuit has been filed today as reported by Crains, this time a class-action:  Class Action Suit Aims to Halt Zestimates in Illinois.

Posted by

Margaret Goss - Winnetka and North Shore Real Estate Broker
Specializing in homes for sale in Winnetka, Wilmette, Kenilworth, Northfield, Glencoe, Glenview, Northbrook, and Evanston.

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Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. Brenda J. Andrew 05/17/2017 09:28 PM
  2. Joyce Marsh, Broker Associate 05/18/2017 12:04 AM
  3. Ralph Gorgoglione 05/18/2017 08:02 AM
  4. Dusty Rhoton, SFR, SRS, CDPE, RSPS, SRES, ABR, GRI 05/18/2017 08:57 AM
  5. Jeanne Dufort 05/19/2017 06:51 AM
  6. Gloria Todor 05/23/2017 03:16 PM
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Rainmaker
490,141
Michele Connors
The Overton Group, LLC Pitt & Carteret County - Greenville, NC
Your Eastern North Carolina Realtor

I hate the preforeclosure claims.... Ive got buyers asking to see homes that are not even on the market but Z is misrepresenting their status and harming the seller in my opinion. 

May 19, 2017 08:16 AM #49
Rainer
329,254
April Swenson
Coldwell Banker Ocean Shores Brokers - Ocean Shores, WA
CRS and Managing Broker - Ocean Shores Real Estate

I am so glad you posted this. I would have never had known about this lawsuit.  It is amazing what people will sue over. This should be thrown out of court. I battle people looking at Zestimates, but you explain that they are not accurate for a local market.

May 19, 2017 09:32 AM #50
Rainmaker
417,434
Dan Tabit
Northstone Real Estate Inc. - Sammamish, WA

Zillow's own CEO sold his home for 40% below the Zestimate.  I wrote about this a while back to document just how reliable Zestimates aren't.  

May 19, 2017 11:29 AM #51
Rainmaker
774,970
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

It had to happen sooner or later.  I'll keep an eye out for the results of the suit.

May 19, 2017 11:44 AM #52
Ambassador
1,427,059
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Good for her. There re too many buyers out there that look at Zillow  Margaret Goss  and feel they really know what is going on in the market place . It makes the buyer think they know more then the professionals

May 19, 2017 12:41 PM #53
Rainmaker
1,037,399
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Zillow is presently taking some heat on a few fronts, Margaret Goss ... as they are also currently facing real pressure from the CFPB regarding advertising issues.  I provide the link to an article on Zillow addressing this:

"Zillow advertising under CFPB fire sets real estate industry on edge"

We may be seeing some changes in regards to Zillow soon?

Gene

 

May 19, 2017 12:48 PM #54
Rainmaker
871,275
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Good article, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - I would love to see changes in Zillow - 

May 19, 2017 01:02 PM #55
Rainmaker
1,759,211
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

I embrace Zillow and include a page in my CMA of sold comps the Zestimate and then the actual sales price, so my sellers can see the difference in real information. It can be high and it can be low but it is never on the nose.  That's because Zillow is not a real estate company. It's a website. It's like comparing You Tube to Star Wars.

 

May 19, 2017 04:22 PM #56
Rainmaker
2,350,889
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

The better thing would be A HUGE Class action suit....

May 19, 2017 06:44 PM #57
Rainmaker
367,702
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

I especially like the underlined sentences you wrote. Going to use those when talking to sellers!  Every single one of them brings up the Zillow estimate.  

May 20, 2017 09:54 AM #58
Rainmaker
486,039
Kathryn Acciari
RE/MAX Professional Associates, with offices in Sturbridge, Charlton, Auburn, Spencer, and Shrewsbury - Sturbridge, MA
RSPS, SRS, REALTOR(R) Sturbridge-Shrewsbury MA

Thank you for sharing this; I had not heard of the suit until now. It is unfortunate that Zillow has gained the trust of the general public. If a property deserves to be sold at a market value much higher than the zestimate, but buyers are relying on the zestimate, that will indeed pose a problem for a home seller.

May 21, 2017 04:52 AM #59
Rainmaker
1,352,949
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

A ballpark figure plus or minus a bunch. Sometimes I wish my bathroom scale operated like Zillow...and then sometimes I am glad they don't. 

May 21, 2017 05:39 AM #60
Rainmaker
758,687
Jan Green
HomeSmart Elite Group,Scottsdale, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Interesting. I'm wondering if they will argue that she could claim ownership of her address on Zillow and post her own data to affect their zestimate?  Will be curious to see how she makes out.  Zestimates can be frustrating for us in this business!

May 21, 2017 04:57 PM #61
Rainer
39,552
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

I don't really come across this issue too much in NYC- where Streeteasy is the king of real estate websites - now owned by Zillow Group, but created independently specific for the NYC apartment market. Thankfully, when Zillow bought Streeteasy they didn't try to include Zestimate's on the site- which were dramatically off base. It wouldn't work well here because of so many variables that you don't have in the single family house market- i.e. 2 apartments are identical except for the floor number. The first apartment is on the 5th floor with views of the building across the street. The other apartment is 2 floors up- and clears the rooftop of the building across the street and has sweeping views. With all else being equal- that could be a six-figure price difference between the 2 apartments.

May 22, 2017 09:05 AM #62
Rainmaker
871,275
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Very interesting about the high rise properties - and of course those things would have a huge impact on price.  One that Zillow can't account for.

May 22, 2017 10:59 AM #63
Rainmaker
871,275
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

I've just added this to the post:

ADDED MAY 22, 2017:  Another Illinois lawsuit has been filed today as reported by Crains, this time a class-action:  Class Action Suit Aims to Halt Zestimates in Illinois.

May 22, 2017 11:35 AM #64
Rainmaker
1,139,402
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Margaret Goss ~ You're right, Andersen is filing a motion to dismiss her initial lawsuit to make way for a class action lawsuit. Although, Andersen is going to represent the plaintiffs in this new suit. I happen to like the direction she's taking "focusing on Zillow's overall practice of posting estimates without the homeowners' consent." Anyway, I hope this gains traction and I hope this eventually stops Zillow from imposing inaccurate and potentially harmful AVM's

May 22, 2017 02:30 PM #65
Ambassador
1,167,099
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Gateway to the Lake" 503-755-2905

Yea!!! I tell all of my clients that I absolutely NEVER work with Zillow and that they AREN'T a real estate site. People are so misinformed when it comes to them. I tell my buyers all of the time, "Zillow never deletes anything! They get it wrong all of the time. We have buyers calling on properties that sold years ago!" And I let them know that THIS is why it rates #1 on google, because of all of its history. 

May 22, 2017 03:38 PM #66
Rainmaker
406,523
Paula Hathaway, REALTOR, Sr. LBA,
Douglas Elliman Real Estate - Southampton, NY
...Finding Your Place In The sun!

Margaret: What we are facing is a time of real chaos with this company--pricing houses without ever having been in the Hamptons was always a thorn in my side for my own home too--I have written many a blog on the subject in the past. Now the problem is that Zillow has discovered the Hamptons and has taken over our local MLS, partnered with my company, Douglas Elliman, took ALL our listings---actually they were GIVEN all our listings and now they are listing FSBOS galore and this small community is falling under the pressure of "Pay up or lose out!!!" More and more agents are paying between $1000 to $2000 a month to Zillow just to get to show up on others listings!!!

With more than 2500 agents in the Hamptons and fewer and fewer listings that we get as brokers, do I need to explain what is happening??? I did write a post about the grave situation here---that was tonight. That was my 6th or 7th post on the matter and it gets me nowhere...Management is blind (or acts like they are) to the whole mess as we lose more and more to the lemmings who follow others to get the direct deal of the century on a home.

May 22, 2017 08:31 PM #67
Rainmaker
871,275
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Paula - what a nightmare.  Personally, I don't pay Zillow a dime and never will.  

May 23, 2017 06:10 AM #68
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Rainmaker
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Margaret Goss

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