Are Zillow Zestimates Actually Appraisal Estimates with a “Z”?

June 1, 2017

When Barbara Andersen listed her home for sale in Glenview, Illinois, this was not the first time that the real estate litigation attorney had listed her home for sale, with an asking price listed well above its Zestimate value. Anderson alleges that Zillow’s estimates have severely impacted her ability to sell and that the property is being unfairly calculated based upon inferior surrounding real estate that was built within a close proximity to a graveyard, and also located nearby a “less desirable” golf course.

The key allegations of the complaint are the poor quality of the real estate website’s estimates, and the problematic influence over prospective buyers viewing these estimates. According to paragraph 13 of the complaint “a tremendous roadblock to same has been the fact the Zillow posts a ‘Zestimate’ of person’s homes without their permission, consent and/or any license to do so.” Further, she alleges that Zillow’s Zestimate is “a sloppy computer-driven appraisal of the home.”  As evidence of this “sloppy nature,” the plaintiff supplemented the complaint with a fall of 2016 sale for $685,000 listed on the website that never occurred.  Andersen stated that she has reasonable belief the houses situated across from her are selling at over $100,000 above her asking price of $626,000.

Aside from allegations pertaining to the unreliability of Zestimates, the plaintiff also accused Zillow of providing favoritism to its broker customers who pay Zillow fees by providing those brokers with better phone and email access. By comparison, homeowner listings do not garner the same level of customer service access, aside from “generic telephone/e-mail addresses staffed with unsophisticated employees.”

In paragraph 11, Andersen argued that Zillow’s services constitute an appraisal, despite the disclaimer and other language on its website. Andersen claims that despite Zillow’s disclaimer, a Zestimate is a real estate appraisal under Illinois law. As a result, she alleged that Zillow is in violation of the appraisal licensing requirements under Illinois law. Since the Zestimate is “an estimate as to market value” and “promoted as a tool for potential buyers to use in assessing market value of a given property,” she contends that the Zestimate tool meets Illinois’ statutory definition of an appraisal.  Illinois defines appraisal within the Real Estate Appraiser Licensing Act of 2002 as “the act or process of developing an opinion of value; an opinion of value (adjective) of or pertaining to appraising and related functions, such as appraisal practice or appraisal services.” 458/1-10. Definitions, IL ST CH 225 § 458/1-10.

Shortly after filing the complaint, Andersen decided to move in a different direction. After filing a motion to dismiss her case, she proceeded to file a class action lawsuit in Illinois state court against Zillow under theories of invasion of privacy, consumer fraud and deceptive business practices, Illinois appraisal licensing violations, and deceptive trade practices. Plaintiffs include “all current owners of real estate property located in Illinois whose property(ies) are listed on Zillow’s website.” The case has been removed to the Northern District of Illinois based on grounds for diversity jurisdiction.

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