Lawyer: Zillow 'Zestimate' illegal appraisal hampering home's sale; Zillow: Only estimate, not appraisal

By Jonathan Bilyk | May 3, 2017

A lawyer in suburban Glenview who is attempting to sell her home has asked the courts to step into her dispute with real estate listing site Zillow over the site’s “Zestimate” of her home, calling the site’s approximation of her home’s value a “sloppy, computer-driven appraisal” of her home, created without her consent and in violation of state law.

On April 27, Barbara Andersen, a real estate lawyer who practices through Andersen Law LLC in north suburban Glenview, filed suit in Cook County Circuit Court against Seattle-based Zillow. She is representing herself in the action.

In the lawsuit, Andersen alleges Zillow’s “Zestimate” – a figure the company says it generates for many homes, whether for sale or not, based on publicly available information about those homes and on information supplied by homeowners about their own houses – has significantly undervalued her home, making it difficult for her to sell her home for the price she believes the house is worth.

In her complaint, Andersen said she bought the home in the 2800 block of Commons Drive, Glenview, in 2009 from the developers of the “Toll Brother” development for $630,000. She said that figure marked a $100,000 discount compared to the sale price of “properties across the street,” while measuring 1,000 square feet larger than those other homes.

While Andersen’s complaint repeatedly asserts the home is located in a very desirable location, she said she has attempted to sell the house on “different occasions” since the end of the Great Recession. Most recently, the house is listed for sale by owner, after Andersen admittedly fired her listing agent and dropped the asking price to $626,000.

She said nearby homes in her neighborhood are again selling for $100,000 more than her asking price.

However, Andersen said her efforts to sell the home have been hampered by Zillow’s Zestimate, which she said has consistently undervalued her home. Currently, Zillow pegs Andersen’s home’s estimate worth at $552,000, according to the home’s listing page on the site, published on May 3.

She claimed Zillow’s home estimating activity is being done improperly, as it is not conducted by a licensed Illinois appraiser, and as such was “illegaly and improper in light of the fact that Zillow is not a licensed appraisal (sic) and had/has no business opinion as to the monetary value of any Illinois resident’s home.”

Andersen said she has asked Zillow on several occasions to remove the “Zestimate” for her home, or change it to reflect “the true value of her home.”

At one point, Zillow overrode its “Zestimate” programming, and entered an estimated value of $650,000, Andersen said.

However, after she fired her agent, Andersen alleged the “Zestimate” again began declining, falling to its current level, which she said is more reflective of “cheap” new homes being built nearby “with no reflection of the superior locale, etc.”

To this point, Andersen’s lawsuit asks the court only for an injunction requiring the company to either remove her home’s “Zestimate” from its site or “amend it to an agreeable market value to Andersen.”

She said estimating financial damages at this point would be difficult, as she has not yet sold her home, and it “is yet unclear” the harm the “Zestimate” has done “to her home’s marketability.”

Zillow spokesperson Emily Heffter said the company believes Andersen’s lawsuit is “without merit.”

She said Zillow was responsive to Andersen’s communications, advising her on several occasions to update her “home facts” on Zillow’s website, to increase the “Zestimate.”

Zillow’s website prominently disclaims its “Zestimates” are not appraisals, but are merely computer-generated estimates intended to help those looking to sell, buy or refinance a home gain a “ballpark” idea of what a house may be worth.  She said Zillow’s estimates primarily rely on public information, but can be adjusted based on information homeowners may provide themselves, to provide key details and information, such as square footage or completed home renovations, that Zillow could not otherwise know.

“A ‘Zestimate’ is a starting point for people,” Heffter said.

Heffter noted competitors to Zillow, such as online real estate site Redfin, also have begun supplying their own competing home value estimates for millions of homes across the U.S.

She said homeowners or buyers seeking to know a home’s true market value should work with local professionals, including real estate agents and licensed appraisers.

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