Friends and Clients —
I’ve got some breaking news to share with you.
In case you haven’t heard already, a woman in Glenview, Illinois has filed a lawsuit against Zillow claiming that her Zestimate repeatedly undervalued her house and created a “tremendous roadblock” to its sale.
The lawsuit was filed in Cook County Circuit Court by real estate lawyer Barbara Andersen. You can get the full story from The Washington Post here, but I’ll summarize the main points for you now.
This suit may be the first of its kind. It says that, despite Zillow’s denial that they don’t offer “appraisals,” the fact that they “are promoted as a tool for potential buyers to use in assessing the market value of a given property,” shows that they meet the definition of an appraisal under Illinois state law.
It argues that Zillow should be licensed to perform appraisals before offering these estimates, while also obtaining “the consent of the homeowner” before they go online.
The Zestimate in question is for Ms. Andersen’s townhouse that she bought for $626,000 in 2009. It overlooks a golf course and is in a prime location, and she listed it on the market for roughly what she payed for it. However, the home’s most recent Zestimate was only $562,000. Ms. Andersen is suing for Zillow to either remove her Zestimate or amend it. She isn’t seeking monetary damages at the time, according to The Washington Post.
Zillow has a different take on the situation. They don’t see their Zestimates as appraisals but rather a tool that utilizes a proprietary formula to assess value, and they say as much on their website.
However, the accuracy of some of these estimates leaves much to be desired. They have a median error rate of 5%, which can translate to a lot of lost money on a home sale or a lot of money left on the table in a home purchase.
It will be interesting to see how this situation plays out. It might be a flash in the pan, but it might just be the start of something else entirely. We’ll be sure to keep you updated.
We also found <a href=”http://abcnews.go.com/GMA/video/zillow-faces-lawsuit-zestimate-tool-47341951” target=”_blank>this video</a> of Shark Tank star and New York real estate mogul Barbara Corcoran giving her thoughts on the lawsuit on “Good Morning America” that we think you might enjoy.
If you have any questions for me about this topic or anything else relating to real estate, give me a call or send me an email. I look forward to hearing from you soon.
Have a great day,