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Real estate website Zillow is facing class action accusations that its “Zestimate” valuation tool misrepresents properties’ real market values.
Plaintiffs Vipul and Jyotsna Patel and Schaumburg-area developer Castle Builders are bringing this Zillow class action lawsuit.
They claim Zillow’s Zestimate tool unlawfully publishes erroneous estimates of property values, misleading potential property buyers and monkeywrenching sellers’ efforts to sell their properties.
The Patels are represented by Illinois attorney Barbara Andersen. Anderson brought her own individual lawsuit against Seattle-based Zillow Group last month, claiming the company’s Zestimate misrepresented the market value of her own home in Glenview, Ill. Andersen has since voluntarily dismissed her own claim so that she can represent the Patels and Castle Builders in this Zillow class action lawsuit.
Zillow is a real estate marketing website. Its Zestimate tool generates an estimated value for a given property, whether or not that property is on the market, by applying a proprietary algorithm to publicly-available information, such as statistics from county assessor’s records. The property’s Zestimate value is published on the Zillow website.
The Zestimate feature alone reportedly draws millions of viewers to Zillow’s website. That creates enormous marketing value for Zillow, which monetizes that viewership by selling advertising to real estate agents. As a result, Zillow’s quarterly revenues reach into the hundreds of millions of dollars.
But property owners have been criticizing Zestimates for years, claiming they can be wildly inaccurate. Zillow itself admits to a median error rate of five percent, but critics say the resulting estimates can be 30 percent or more off the mark from a given property’s actual market value.
Zillow insists that its Zestimate is not an appraisal. The company characterizes Zestimates as merely a “starting point to determine a home’s value.”
Andersen strongly disagrees. She argues that by publicizing an estimated value for a property, Zillow subjects itself to the laws governing professional real estate appraisers – laws that impose licensing requirements and obligations of confidentiality.
The standard appraisal process also affords property owners the right to challenge the appraiser’s valuation process, Andersen says. She alleges that Zillow doesn’t offer a comparable process to allow correction of a Zestimate.
The Patels claim that potential home buyers treat a Zestimate as a formal appraisal, whether it is one or not. They complain that Zestimates are frequently 20 percent lower than the property’s fair market value, setting up unrealistic expectations in potential buyers’ minds.
Before Andersen refilled this Zillow class action lawsuit on behalf of the Patels and Castle Builders, she accused Zillow of publishing a misleading Zestimate of her own home’s value. The alleged undervaluation has been a substantial obstacle in her attempts to sell the home, she claims.
Andersen says Zillow erroneously stated that her home sold in the fall of 2016 for $685,000. A more recent Zestimate publicized the home’s value at $562,000, she alleges, giving the false impression of a $90,000 drop in value in only six months. The property’s Zestimate value has purportedly dropped even lower since then.
Andersen says she repeatedly contacted Zillow, trying to get them to correct or remove the allegedly erroneous Zestimate. The company ignored her contacts, she claims.
Anderson is still trying to sell her home. She has posted an asking price of $626,000, but a recent Zestimate says the property is worth only $537,788.
The Zillow Zestimates Class Action Lawsuit is Patel, et al. v. Zillow Inc., et al., Case No. 1:17-cv-04008, in the U.S. District Court for the Northern District of Illinois.
UPDATE: On Oct. 18, 2017, for a second time, Zillow asked an Illinois federal judge to dismiss a class action lawsuit that claims Zillow’s “Zestimate” tool is misleading. In its motion to dismiss the amended Zestimate lawsuit, Zillow argued that the plaintiffs’ amended complaint also fails to state a viable legal claim.
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36 thoughts onZillow Class Action Says ‘Zestimate’ Misrepresents Property Values
I Live in the Bay Area. Zillow had their zestimate for my home at $811,000 In May. I put it on the market to sell May 31 and by June 3rd they dropped the value to $760,000. My home dropped $46,000 and zillow perdiction was it would increase only by 1% in the coming year. In the Bay Area homes are going up 1% or more in a month. I contacted zillow and was told the property would increase once the agent added all amenities. Nothing is differant from May to June with my property. Nothing has changed with my home it should still be $811,000 value. There isn’t anyway it could drop by $46,000 in 1 month??? This has hurt the sell of my home and confused buyers. Redfin estimated my home at $813,000. A lisensed appraiser, appraised my home higher than zillow. I told zillow to remove the zestimate altogether I was told they can’t. This company needs to be stopped immediately from appraising properties they are not lisensed appraisers. They are hurting hownowners monetarily.
Zillow misrepresented the value of our home & property both that we sold and purchased.
My home is for sale right now and Zillow just dropped my price in half for their zestimate after only 6 weeks on the market. I feel it is hurting my sale price and activity tremendously.
I also believe Zillows estimate of my home is also underpriced by at least $50,000, while theyre zestimate for my neighbors home is overpriced by $100,000. I would like to join a class action lawsuit. Is there one?
I too would like to join a class action lawsuit against Zillow as my house has lost $40,000 in value according to Zillow whereas I have invested over $100,000 in updates. Let me know if there is a group to join with.
Low Zillow resulted in lower offer in 2015 from investor purchaser of condo sale.
When I sold my home in 2014 they had my house listed below the value. I do not know if that affected the price at all but I know it cause me to rethink what to price the house.
Zillow misrepresented the value of our home & property by $80-100m for 2 years but has recently up its “zestimate” to undervalue by $30000 or more.
We have been listed for 2 years & unable to sell because of zillow. They actually have a value chart on our listing. Our agent said they did not value the extra 14 acres and 2 barns or pipe fence or water & electric to pastures or the 20 KW generator or the pool.
How can Zillow put out a price without ever seeing the property? Is Zillow licensed?
I have a vacation home for sale in north central Pa. I had it listed for $298500 and Zillow said per their Zestimate that it was worth $139000. They were using selling prices in my area with no consideration of how many acres of land went with the property. If a property sold for $135000 and had two acres of land how could you intelligently compare that property to another that has 22 acres in the offer? There was no allowance for acreage.Land in my area goes for $2500-$2700 per acre. I often wonder how many people looked at my listing and thought I was way overpriced because of that low “Zestimate”.
Zillow is lying about your home’s value to the world. If you try to sell your home for $400,000 (which it is really worth) it should be illegal for Zillow to say it’s only worth $320,000. That is a downright misrepresentation of the truth, false advertising. They are off by over 20 in value at least 1 in every 10 homes. That means in the USA if there are 10 million homes for sale right now and the average price is $300,000, Zillow might be saying that 500,000 of the homes worth $300,000 are worth $360,000 and another 500,000 of those homes is only worth $240,000.
I’ve seen Zillow’s Zestimates off 50% or more in some cases. This really should be a nationwide class action lawsuit. Zillow has lied about your home values for a decade, during the housing crisis they were likely responsible for many foreclosures, short sales and lost profits for many home owners. Imagine there’s a bully standing in front of your home when it’s for sale at $300,000 (fair market value) and that bully is telling people to go away and telling the potential buyers that your home is only worth $250,000 or worth less. It happens far more than it is reported and absolutely is an illegal business practice. They have been stealing profits rightfully earned by homeowners for many years.
*They are off by over 20% in value in at least 1 in 10 homes*
I agree there zestimates are not correct.