Zillow under Class Action Lawsuit for Fake Estimates

Chicago Tribune
May 23, 2017

Zillow uses “nonsense” methods to estimate home prices, creating potential losses for property owners, according to a lawsuit filed Friday in Cook County Circuit Court.

The real estate website, which displays homes making what it calls a “Zestimate,” shouldn’t be making appraisals without a valid appraisal license, said the lawyer, Barbara Andersen of Andersen Law. The Glenview lawyer earlier sued Zillow over the estimate on her own home, but in this most recent lawsuit she is representing CastleBldrs.com and Vipul Patel, Bhasker Patel and Jyotsna Patel.

They own four properties in Schaumburg and one in South Barrington, according to the lawsuit, which seeks class-action status.

As an example of the alleged problem with the Zestimates, the lawsuit cites property on Columbine Drive in Schaumburg that is listed at almost $1.5 million but whose value Zillow estimates is less than $1.1 million.

The class is likely to consist of millions of homeowners, the lawsuit says.

The lawsuit seeks an injunction against Zillow, saying that the Patels and the company have never requested or authorized Zillow to gather data about their properties or to publish it. One of the questions that the lawsuit raises is whether Zillow’s publishing homes with a Zestimate “violates the tort of invasion of seclusion.”

Zillow spokeswoman Emily Heffter said the claims are “without merit.”

“We always say that the Zestimate is a starting point to determine a home’s value and isn’t an official appraisal,” she said. “Estimating value based on public information and statistics is a well-accepted practice.”

Even the Illinois appraisal statute on which the complaint relies acknowledges the difference between an appraisal — an assessment of the value of a specific home, based on a physical inspection by a licensed professional — and a statistical estimate based on public information and doesn’t apply to the latter, Heffter said.

“The Zestimate is a computer-generated estimated market value that we create for more than 100 million homes,” she said.

Homeowners should work with a local real estate agent to determine the best price and marketing strategy, Heffter said.

In the past, Zillow has faced the opposite criticism, with some arguing that its algorithm inflated home values on the site helped fuel the housing bubble that led to the financial crisis.

byerak@chicagotribune.com

Twitter @beckyyerak

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