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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.
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!
Zillow is crap and their estimates are hugely flawed. Have seen them value homes that just sold for more than 20% less. Their algorithms are hokum.
But, it's a great way to get stupid buyers to the table. They want the house, and will always pay more if you know how to negotiate.
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
Okay, so they suck. Should they be censored over it? Because this is what is being demanded.
“He’s not deformed, he’s just drunk!”
The argument is a Zestimate is a type of appraisal. And appraisals have legal requirements that must be met.
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.
You'd think that they'd filter out buildings like that.
Especially with undesirable tenants living there.
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.
The argument is a Zestimate is a type of appraisal. And appraisals have legal requirements that must be met.
That's a rather odd argument. No one looks at the house, or goes inside. the neighbor posting on Facebook that they think the house should be valued less would be as equal a lawsuit target.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
It's a fairly decent algorithm but by no means complete
Their algorithm is smoke and mirrors.
I bought my house in 2013 for $235k. I would get an e-mail from them every other month or so, saying "your zestimate increased/decreased, here is the new one". I have a few of those e-mails still hanging around my inbox, the latest was from February of this year, saying my Zestimate was now at $315. A month ago my neighbor listed his house, for about $279, my Zestimate mysteriously dropped to 289, and the history never comes anywhere near the $315.
Now, I know they have the right to change their Zestimate, it is their site after all, but why the unabashed altering of their own historical data? That part doesn't make sense.
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.
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
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
To me this reads as a homeowner over valueing their home (I saw this a lot when shopping FSBO trying to save). The houses across the street are selling, this home owner is missing something about why theirs is not. They are blaming the zestimate instead. Just like when I was shopping, and people were comparing their house to slightly smaller but nicely remodeled homes to their old carpet sad kitchen ones.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
i'll offer you $400 for the house
No, the question is whether they should be regulated. Appraisals have specific regulations, so if people are using this service in lieu of actual appraisal services...
To me, this seems a bit like Uber claiming "we're not a taxi service" while blatantly offering a slightly different sort of taxi service. Just because they claim "this isn't an appraisal service" doesn't mean it actually *isn't* an appraisal service. They may end up winning if there's a legal definition of "appraisal" that they don't match, of course. I really don't know enough about appraisals or this case to have much of an opinion.
Irony: Agile development has too much intertia to be abandoned now.
No, the question is whether they should be regulated. Appraisals have specific regulations, so if people are using this service in lieu of actual appraisal services...
To me, this seems a bit like Uber claiming "we're not a taxi service" while blatantly offering a slightly different sort of taxi service. Just because they claim "this isn't an appraisal service" doesn't mean it actually *isn't* an appraisal service. They may end up winning if there's a legal definition of "appraisal" that they don't match, of course. I really don't know enough about appraisals or this case to have much of an opinion.
An actual appraisal does require a certified appraiser, at least in some situations: "All states require appraisers to be state licensed or certified in order to provide appraisals to federally regulated lenders. Some states require appraisers to be licensed or certified to provide appraisals for other parties as well." http://www.appraisalinstitute....
This seems to me a bit like suing a website that provides free legal advice with the caveat that they are not lawyers so their advice has no legal standing.
Comparables are always up for debate.
We went through this financing a remodel for our house in 2003. The original appraisal was flawed in our opinion because while the structures were comparable, they all lacked the location feature of our house -- no rear neighbors, and adjacent to a 50 acre wooded lake.
The appraiser admitted that his comps were flawed -- there 4 other lakes in the city were larger, and all the homes on those lakes were mansions worth millions, so they wouldn't work as comps, and there were too few recent home sales on our lake for comparison.
The lender eventually got the appraiser to work harder at finding similar structures with scenic natural overlooks and we gained meaningful increases in appraisal. Fortunately for us, the lender would have lost the loan without the appraisal change, so they had an incentive to pressure the appraiser and accept it in underwriting.
People in suburban subdivisions are kind of fucked on appraisals, as there's little differentiation. Their house really is worth what any 4 recent sales in the same area are worth because the homes and settings are nearly all alike.
But people with unusual geographic features are also kind of fucked unless they insist that those unique features be accounted for.