One Illinois homeowner is suing Zillow for their inaccurate Zestimate of her home’s value. This could mean big things for the industry.
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In case you haven’t heard, a woman in Glenview, Illinois has filed a lawsuit against Zillow claiming that her Zestimate repeatedly undervalued her house and created a roadblock to its sale.
In case you haven’t heard, a woman in Glenview, Illinois has filed a lawsuit against Zillow claiming that her Zestimate repeatedly undervalued her house and created a roadblock to its sale.
It’s important to note that this suit is the first of its kind. Despite Zillow’s denial that they are offering appraisals, the fact that they promote the Zestimate as a tool for buyers to use when assessing the value of a property means that they do meet the definition of an appraisal under Illinois state law.
The lawsuit also argues that Zillow should be licensed to perform appraisals before running these Zestimates, and that Zillow needs to obtain the consent of the homeowner before listing the Zestimate online, which I can certainly understand.
The lawsuit asks that Zillow obtain a homeowner’s permission before posting the Zestimate.
The Zestimate in question is for Miss Anderson, who bought her townhome for $626,000 back in 2009. The property overlooks a golf course and is in a prime location, so she listed the home roughly for what she paid for it. However, the home’s most recent Zestimate was only for $562,000. She is suing Zillow to remove or amend her Zestimate; she is not seeking monetary damages at this point.
Zillow obviously has a different perspective on this website. They don’t view their Zestimates as appraisals. According to Zillow, Zestimates are simply a tool that helps people utilize proprietary formulae to assess value as a starting point.
Unfortunately, the accuracy of these Zestimates leaves much to be desired. Zestimates have a median error rate of 5%, which can translate into a lot of money lost in a home sale.
It will be interesting to see how this lawsuit plays out. Obviously, Zillow is a massive player in the real estate industry. They even purchased Trulia a couple of years ago, so this is a big deal. We’ll see if this lawsuit is just a flash in the pan or if it turns into something else.
You can hear more about this lawsuit from Barbara Corcoran, who recently appeared on “Good Morning America” to discuss the lawsuit.
Ultimately, this lawsuit should show you that you can’t rely on Zillow to come up with a home’s value. If you have any other questions about Zillow or real estate in general, just give me a call or send me an email. I would be happy to help you!
