I rarely re-blog. But this one is really important.
This is what happens when you put yourself out there as an authoritative source "on autopilot" It's the equivalent of having a website that will diagnose your illness and skip the personal visit with your physician.
Accountability will always come into play........
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:
"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 increase 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.
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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