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Zillow Faces Lawsuit Over 'Zestimate' Tool That Calculates a House's Worth (washingtonpost.com)
According to The Washington Post, "a homeowner has filed suit against online reality giant Zillow, claiming the company's controversial 'Zestimate' tool repeatedly undervalued her house, creating a 'tremendous road block' to its sale." From the report: The suit, which may be the first of its kind, was filed in Cook County Circuit Court by a Glenview, Ill., real estate lawyer, Barbara Andersen. The suit alleges that despite Zillow's denial that Zestimates constitute "appraisals," the fact that they offer market-value estimates and "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 state law. Not only should Zillow be licensed to perform appraisals before offering such estimates, the suit argues, but it also should obtain "the consent of the homeowner" before posting them online for everyone to see. In an interview, Andersen told me she is considering bringing the issue to the Illinois attorney general because it affects all property owners in the state. She has also been approached about turning the matter into a class action, which could touch millions of owners across the country. In the suit, Andersen said that she has been trying to sell her townhouse, which overlooks a golf course and is in a prime location, for $626,000 -- roughly what she paid for it in 2009. Houses directly across the street but with greater square footage sell for $100,000 more, according to her court filing. But Zillow's automated valuation system has apparently used sales of newly constructed houses from a different and less costly part of town as comparables in valuing her townhouse, she says. The most recent Zestimate is for $562,000. Andersen is seeking an injunction against Zillow and wants the company to either remove her Zestimate or amend it. For the time being, she is not seeking monetary damages, she told me.
Sorry, I stopped reading there. I guess lawyers got tired of chasing ambulances.
They are a very crude tool using broad, flawed algorithms. If you want a real appraisal, hire an appraiser.
Real estate professionals know they are wrong but they will be happy to use them as an excuse to try to knock down the price of a house they are buying or pump up the price of a house they are selling.
I have no idea of their legal standing but it seems this suit is on shaky ground.
I don't read your sig. Why are you reading mine?
Dumb ass millennial law school grad trusts online stuff over real life, is unpleasantly disappointed that real life trumps appy app apps! And sues!!!!
news at 11
Let me see, would that be Oculus?
To fix this, "take ownership" of your property on Zillow and edit the property details and add an extra 1,000 sqft to it. Magically your value will go up. Thats what I did 5 years ago!
Same here. I love the fact that I'm not a poor so in down markets, I can snatch up quality rental properties cheaply. Then in up markets, poors cant afford to buy so they rent from me at over 50% more than my carrying costs. Then when a down market hits, semi-poors lose their house but want to live in similar school districts so I can rent to them (and they even volunteer to mow the lawn for like $50 off the monthly rent), it's great!
Take ownership of the property on Zillow and at least put in the correct details. Zillow doesn't even have the square footage of the apartment; of course it's Zestimate is going to be worthless. There are no details other than it is a 3 bedroom 3 bath townhouse. This is one dumb real estate agent.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Entitled law-bitch needs the big paw slap-down. She has no rights to ANY control over estimated property value ... whatever property she may display .
1 Infinite Loop, Cupertino, CA 95014 3 beds 3 baths -- sqft Edit Edit home facts for a more accurate Zestimate. OFF MARKET Zestimate®: $1,840,871 Well. Very undervalued
I need a Sino-Logic 16. Sogo-7 data-gloves, a GPL stealth module...
Seems completely reasonable. Should be a feature if you can prove you're the owner.
I hope she wins.
Zillow currently thinks my house is on the cow field next door. I don't care as my house isn't on the market, but would if I was attempting to sell it.
Compilation of public domain data hardly constitutes or negates an appraisal. Tax assessor and comp data is readily and publicly available, and usually online. Cook County Laws really do exactly what, anyway? Look at those violent gun crimes!
i can't tell you how many times Wells Fargo in Nevada by using Zillow as a gauging instrument to say to me... refinance probably not a good idea. they were right when we in Washoe county was hit the hardest...and even 10 years later, just barely getting back to break-even... and i didn't even buy low.. i was on the up swing in 2004... so i did not buy high.. just about 50% up the bubble.. it will work out.. zillow is fun to try --- use the Make Me Move feature to help stimulate interest and market interest... it works.
I've never heard of Zestimate. I would give as much credibility to them as I would to an "anonymous coward".
then it would cool down the ridiculously over-priced housing market where a small old rubbish house costs well over a $1 million
A roommate and I rented the front unit of a triplex in Silicon Valley after the dot com bust. I had planted some petunias in the front yard, got busy with life, and let the petunias die. While we were out in front one day, a little old lady came up to tell us that the dead petunias in our front yard lowered the value of her house down the street by $25K. I asked her if she was selling her house. She said no. I asked her how she knew that the value of her house dropped by $25K if it wasn't up for sale. She walked away in a huff.
The "luxury" apartments in my immediate area have a 50% vacancy rate in San Jose. The last time this happened was after the dot com bust and the Great Recession. The apartment bubble might be easing as new apartments and condos are coming online. Or maybe Silicon Valley is slowing down.
...towards sellers, not buyers.
Time is what keeps everything from happening all at once.
Or maybe people don't want to live in your neighborhood. Or maybe they earn $50k as an IT contractor in Silicon Valley and can't afford it.
Or maybe people don't want to live in your neighborhood.
Or maybe all the cigarette and pot smokers moved out because federal law applies to the apartment complex and smokers have to go outside the gates to smoke.
Or maybe they earn $50k as an IT contractor in Silicon Valley and can't afford it.
For an extra $200 per month, I could get an additional wall to have a one-bedroom apartment.
That is probably a good choice, but some of us are probably more credible than that site is. Probably...
I have a contract to sell on a house that Zillow lists for about there times what I was able to sell it for. Both Zillow and county appraisers don't take the condition of the property into account. Both mostly just use square footage and recent sales nearby. For a house built in 1973 and never updated or renovated (think plastic counter tops and pink tile in the bath) the actual price you can sell it for can be far lower than either of those "appraisals".
It never ceases to amaze me the idiots who think they'll get something of certified quality, that normally costs hundreds or even thousands of dollars, for a few bucks or even free. Both this lawyer, and any users of the site which give these "zestimates" too much weight, are fools. Unfortunately I see it quite often in my line of work (GIS mapping), you can can repeat a half dozen times that it's only a rough idea and their neighbors will still come in a week or so later complaining that the person was waving around the map as "proof" where the property line was. And it is of course magnified by confirmation bias, with cases where issues may exist being routinely dismissed by the individuals and cases where the line is advantageous to them being touted as absolute proof. What's that old saying, "buyer beware"?
Robert Reich said he'd believe corporations are people when Texas executes one. I'll believe Zillow provides "appraisals" when a mortgage company accepts a Zestimate.
TREMENDOUSLY TREMENDOUS.
Or maybe all the cigarette and pot smokers moved out because federal law applies to the apartment complex and smokers have to go outside the gates to smoke.
There is no such law. An apartment manager might tell you that just to get you to cooperate, but there's no actual law requiring that. However, as per the Fair Housing Act, if one tenant has breathing problems and another nearby tenant smokes, they can force the smoking tenant to move to another unit and/or move out of the complex entirely. If the landlord doesn't comply and doesn't forcibly move that tenant, they can get sued.
The apartment I used to live in had rules requiring that all smoking happen off premises, which was just their own bylaw that you had to agree to when you signed your lease. However, the one I live at now doesn't; they just have to be in certain designated areas.
No matter what though, in the event of any kind of dispute, the law (rightfully, IMO) tends to discriminate against the smoker's civil rights if they conflict with that of a nonsmoker's civil rights.
That depends on the market. Over here, mortgages tend to be about half (on a monthly basis) of what rent costs.
Either way though, I honestly can't wait for the next real estate crash. Houses are way fucking overpriced, and I'm about to the point where I could just pay cash in a market like the one seen in 2011.
We haven't yet seen Trumpanomics, but I suspect they will be full of fail, which is perfect so long as we don't see stagflation.
However, as per the Fair Housing Act, if one tenant has breathing problems and another nearby tenant smokes, they can force the smoking tenant to move to another unit and/or move out of the complex entirely.
What the situation could be since the apartment complex is covered by the Fair Housing Act (federal law), CA-legal pot smoking isn't allowed. If the pot smokers have to go outside the gates, the cigarette smokers have to go outside the gates as well.
1) I agree that Zillow is not accurate. It consistently mis-priced my condo for a long time. Among other things, it doesn't account for the quality of the interior at all. Nor does it properly take into account 'equivalents', which in NYC may be restricted to other condos in a specific building, and not include condos across the street.
2) I also agree that Zillow should have a better 'user complaint' form, specifically if a licensed appraiser submits a value, they should willingly replace their estimate with it.
3) But requiring them to be licensed is silly.
4) Also, no serious buyer would use the Zillow price rather than a price a Realtor suggested. Realtors know about the issues in #1 and account for it. At most you will be eliminating those people too cheap to use a realtor.
This is not going to reduce your price sold by more than 3%, and is unlikely to increase it either (unless you get someone not using a realtor who is also foolish enough to ignore the licensed appraisal.)
excitingthingstodo.blogspot.com
The reality is that the entire market is comprised of numbers pulled out of the air. Therefore, suing Zillow for doing what the entire market is doing is completely bogus.
That said, I kind of hate how Kelly Blue Book dictates the price of the entire auto resale market, so yes, all appraisals should be abolished. It's hard to do though in a market of non-fungible items, like houses, where there is no fully objective way to compare one house to another.
There's also insurance issues.
Apartments that totally ban smoking get discounts on it, since they've banned a major source of fires.
Smoking bans are generally market based, not law based.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Zillow accounts for the interior to a point, as it recalibrates on past sales of a property (from what I can tell).
Now, a remodel since the last sale is ignored, but all of your other points still stand in that case. People look at what's available when they buy, and real estate actually functions as a decent market.
The person complaining probably has a shittier house than across the street of they can't sell it for the same price.
Home owners seem to completely over value their house on general.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
It amazes me that someone didnt sue them years ago for this.
There's no way a website can generata an accurate estimate for your house, but people will beleive the figure they post or at least use it as a guideline so ts its inevitably gonna be harder to convince potential buyers that zillow in fact fucked up rather than you are overvaluing it.
I'd go as far as to say that their estimates are basically self-fulfilling prophecies that can easily hurt both buyers and sellers in the pocket by skewing the market value,
Wages haven't caught up with the rampant inflation we're getting (real estate, stocks, etc).
Engineering grads should be starting at ~$300k avg
To the extent that governments prevent price discovery from happening, the result is misallocation of resources within the economy and dead weight loss. Some small number of people may benefit from the opacity, but everyone loses when it's hard to find out how much something is really worth or costs. Don't believe that? Just look at the US health care system. I dare you to find out the actual cost of your upcoming surgery. There's almost no way to find out for sure until you get the bill so you have no idea how much it will be exactly except that it will be very expensive. Now imagine if buying houses was like buying surgical treatment in any US hospital. Would you like it better that way? I know that I wouldn't.
Here around when you do estimate a home, you do it in a professional settings. And you are held accountable to it. The problem is you seem to want to give them a free pass, no accountability. That may be the greatest downfall of the US : private corp being not held accountable to standard. Well here is a person which ask them to correct data they falsely entered. This is not censor, this is asking for correction of wrong data.
A much better way of doing this is to show sale prices of properties nearby, as the UK sites right move and Zoopla do. This way you can see which are roughly equivalent properties pretty quickly, then look on street view to refine your matches or even go and drive past in person.
Lying about real estate in NYC is a time honored tradition. So much so that most locals will just assume any listing overstates the square footage by 10-15% (or more). If you're even remotely honest your listing it's not going to priced with comparable places.
To this day my favorite "exaggeration" was a studio with "600 sq ft". I show up and it's actually ~200 sq ft of living space with ~300 sq ft of uncovered rooftop balcony. You could barely open the refrigerator without hitting the bed that was currently in it. Sad thing is, I almost took it (I was new to the city and didn't realize with places like that you give the deposit before you leave or it's gone 5 secs later).
Oooh, that IS insightful. Thanks for posting another comment.
Despite Zillow's little disclaimer, which is designed to make all liability magically disappear for them, they are liable for real damages to this person, in the exact way their lawyer stated.
Do they use them for AirBnB? In my area there is a luxury condo that I thought was having trouble, but I always see out of state cars coming out of the parking lot.
Zestimates are pointless because everyone except for absolute newbies to the real estate market knows they are completely wrong. Newbies will rapidly become educated - no, sorry, that ramshackle house your mom willed to you in the wilds of some depressed former coal mining region isn't worth $750,000 when literally every other home being sold near there is going for 1/10th that.
Further, Zillow re-writes history when Zestimates change - there's an historical graph they have that doesn't remotely match what their Zestimate is - anyone who has tracked a place over time knows this.
They hurt Zillow because there is literally no reason to go to Zillow over any other real estate site - if you can't trust their numbers and see that they are willing to lie to try and cover up just how bad their numbers are, why not use someone else who at least doesn't do that?
Since I can't tell them apart, I treat all ACs as the same person.
About a year ago my property value shot up over ~$120k very quickly. Its fallen back down to about what we paid, so I can see sites like this could set unrealistic expectations.
Buyer Beware.
Users too. :P
The most important distinction being that a CMA is not an official determination of value, it's a non-binding estimate. Agents get mad at appraisers all the time for using properties they don't think are comparable when putting the appraisal together. Agents and appraisers both get mad at Zillow for using a pretty weak CMA algorithm. They both use tools that give them something like a Zillow estimate, but then dig into it manually.
She's blaming Zillow for her woes is she ? Zillow has some usefulness, but is far from a total ( or accurate ) picture of why a home price is what it is.
What's next ? Folks going to go after Edmunds True Car Value or Kelly Blue Book because they feel they're undervaluing their cars ? :|
It's a third party ESTIMATE based on an algorithm for fucks sake.
You want to know what counts ? The folks that actually appraise your home periodically to set your tax rate. ( I highly doubt they rely on Zillow data btw ) That's the only one that counts because that's the one the banks are going to use to determine the worth of a home when it comes time to lend money. You trying to sell your home for $800k, but it officially appraises at $500k ? Well, guess what. The bank isn't about to lend anyone $800k on that home. You want it ? You'll have to come up with the other $300k on your own.
Welcome to reality.
I can't speak for other areas / States, but where I live it's dead simple to pull up the official tax records ( they're online and public record ) on ANY home in the county to see what value it appraised at for the past decade. If you want to sell your home for near $650k, you damn well better make sure that it officially appraises close to that figure. Otherwise, you're just suffering from delusions of grandeur.
Also, no serious buyer would use the Zillow price rather than a price a Realtor suggested.
Realtors aren't any better. They exist to maximize their profits and minimize their costs. I have yet to meet a Realtor whose best interests align with mine. They're almost as bad as the Nigerian scammers, but not quite.
I have no idea how they calculate my home's value, but it's obviously not based on direct comps from recent sales around here. The square foot price that they're using is about 10% lower than what I would easily get. To be fair, home prices have risen by something like 30% in the last 3 years since I bought it, and it looks like zestimate doesn't handle this sort of market very well.
Do you have ESP?
No. The owner of a product doesn't have any power over a consumer to sequester an appraisal of value. I don't give two shits if Toshiba says their MSRP is $500 for a TV, I am free to appraise it's value on my own. If I say it's worth $5 dollars because it is a piece of shit TV, I have that freedom. Property assessment is just that, just because you disagree with someone's estimate doesn't grant you the right suppress that. More snowflake orwellian fascist mentality spilling out.
Zillow blindly scrapes the sales info from county web sites and deed book. I was seriously looking to buy a condo in Florida. Curiously two condo units had double the value of all other identical units. Did some digging and found someone, likely an investment company, bought two condos in one deed. Zillow has happily assigned the total price to each condo!
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Zillow says (in TFA) that there's only a 55% chance that the estimate is within 5%, 75% within 10%, and 90% that within 20%.
As others note, Zillow doesn't know about interior condition, nor does it know if people have been manipulating the data.
The lenders certainly have much better Automatic Valuation Models (AVMs) probably 95% accuracy within 5%.
Zillow's published numbers may also be deliberately loose and randomized for marketing reasons.
What about website/domain name value estimators? They also pull a seemingly-random number out of a hat, disagreeing with each other by 1000% or more, and no doubt impact what a buyer is willing to pay. Yet it's hard to see how it would be in the public interest to outlaw all machine-generated estimates.
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Do they use them for AirBnB?
Funny you should mentioned that. My apartment complex announced that they have guest apartments available for short-term rentals. I don't think they're doing AirBnB yet.
I treat the Zillow estimate the same way as a budgetary quote for customers, it's+-30%. Using the 30% number her townhome fall's well within the range of the margin of error. If you want a real estimate pay to have a person to come look at your house and put a value on it, they are called restate agents.
There's a giant "I disagree with this Zestimate" right under the Zestimate. It allows you to offer a real appraisal (which generally costs money -- in Northern California it's around $400) through an agent.
And the Zestimate is going to go up and down, just like any other estimate. If the house next to yours sells for $100,000 less than you might have thought, your house will likely drop in value. Your house might sell for a lot more, but the value will drop regardless as neighborhoods count towards your appraisal.
But yes, the Zestimate is inaccurate at best. But then, most appraisals, even the $400 ones, are just best guesses -- they look at your house, comparable sales if any, the neighborhood trend. Our house was appraised at $30K more than we expected -- more than the realtor expected too (appraisals in NorCal are independent of realtors for obvious reasons). But this magically put us above water on the home and we were able to refinance -- just because of a best guess at the value of our house by a "professional".
According to The Washington Post, "a homeowner has filed suit against online reality giant Zillow....
What the hell is a reality giant? Is this some sort of new online business venture?
By the time a house pops up on zillow its already sold, I know cause I was in them a week or more before. Their square footage is almost always wrong and their estimate's are just random guesses.
When I bought my house last year it took about a day of looking at zillow to know its absolute worthless bullshit
The last time I was looking at them, between '10 and '12, 100% of the time they *massively* OVERVALUED the properties, and sizes.
Data: my real estate agent Chicago (which, btw, is Cook Co), did her due dilligence in '03. Zillow claimed that, at the time, it was worth 20% more. They lied.
I looked at the house I bought in Montgomery Co, MD, in '11. They claimed it had something like 500^2 *more* than it does (and was worth more than I paid).
They're crooks. Refin, on the other hand, seems to give *reasonable* values, and correct square footage.
What are you talking about, if you are trying to sell YOUR house at $100k above the Zillow estimate, you do not think that will have an affect on whether folks think you price is too high? Try it, I doubt you will like it.
This suit should be thrown out at the preliminary hearing. Zillow is stating an opinion, and they have every right to do so.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
In my real estate market, I pay almost the same amount to buy as it would cost me to rent a house like mine.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Zillow showed my house as being worth so much that we started the paperwork with our mortgage broker to get cash out (we wanted to finish the basement). The mortgage broker confirmed Zillow's valuation as "a good faith estimate" but required an actual appraisal.. The official appraisal (which cost us $500) came back nearly half of what Zillow estimated, and based on how much we still owed we didn't qualify. I wanted to sue Zillow for their misleading estimate but thought that what they did wasn't actionable.
Hahahahahahahaha. A graduate in most fields are useless right out of school. There's people in Computer Science and Electrical Engineering who've never used a soldering iron.
thats because san jose has idiots in charge who allow homeless to suffer on streets. (they also cant figure out stop light sensors in silicon valley - the irony is ridiculous) so you sit for 5 minutes. buildings with high vacancies also suck. no real estate interpretive value. overall mortgage is 150% higher than rent in downtown sj.
"luxury" and "apartment" are mutually exclusive.
Having just about closed on a house, I did look at ZIllow, and I would say that the advice on a home may vary by home. I had one home that the realtor did not trust those estimates, told me not to trust them, that I should offer X at least, so as not to 'upset' the owner. So on that home I ended up deciding that amount was unacceptable. We looked at more houses, and this one, we thought based on what the Realtor knew, offered just a bit below the ask price, and it turned out it appraised within 1500 of our offer price (it was a little less). (BTW the first house I mentioned has been repriced 3 or 4 times in the month since. and is now closer to where I thought it was worth.) The reality is many homes were overbought before Dodd Frank, and now most lenders won't overlend (lend for more than property is worth), but there are some owners who are caught who over bought, but weren't foreclosed on.
And you run into people who either expect to get a lot of inflated value out of their home or have no choice because they need to sell because they over bought. So you still have people who may list properties too high, and in some regions they won't sell.
That's my knowledge of the current market in my area, but I'm by no means a realtor or an expert.
In my experience, Zillow's estimate is B.S.
According to them, my house's value went from $550,000 last fall to $670,000 today. Plus the smaller house on the smaller lot behind me which used to be worth ~$90k less than mine, is now worth about ~$20k more than mine, according to their estimates.
The argument that their estimates don't have any impact on sale prices is B.S., too. If that were the case, then why are they in business? What is the point of Zillow if not to get home price estimates? Their argument is as ridiculous as a physician trying to defend against malpractice by saying that their medical advice shouldn't be taken literally, it's just an estimate.
She should go after them for damages, including punitive damages. I'm getting sick and tired of sociopathic tech companies that think they can screw people any which way they please in order to make a buck.