Since its inception, Zillow’s home-value calculator, know as the “Zestimate” has been one of the most controversial features of the company’s real estate portal. Zillow co-founder Rich Barton openly admitted to GeekWire that the tool is “very provocative and personal and a little voyeuristic.”
Provocative is a surefire way to draw eyes to your site — crucial for any online ad-supported business — but it does come at a price. Zillow is often approached by homeowners complaining about their Zestimates, and now one is taking to matter to court.
Barbara Andersen, a real estate lawyer in Glenview, Ill., claims in a lawsuit filed in Cook County Circuit Court that Zillow’s Zestimate is making it difficult to sell her home. She isn’t seeking any financial compensation but is asking the court for an injunction that would require Zillow to either remove or modify the Zestimate of her property.
“Since the recession, Andersen has been attempting to sell her home on different occasions. However, a tremendous roadblock to same has been the fact that Zillow posts a ‘Zestimate’ of person’s homes without their permission, consent and/or any license to do so,” says the complaint, spotted by Courthouse News. “An estimate is effectively a sloppy computer-driven appraisal of the home.”
Andersen says Zillow is in violation of Illinois state law, which forbids people or businesses from issuing appraisals without the proper license. Zillow vehemently rejects the notion that its Zestimate is an appraisal.
“We always say that the Zestimate is not an appraisal and it’s not a price,” a Zillow spokesperson told GeekWire. “It’s an estimate. The way that the Zestimate works is, we take all the information we have … anything you put a number on … and we put it all into our algorithm and it sends a number out.”
According to the complaint, Andersen purchased her house for $630,000 in 2009. She says it is of higher value than nearby units which were constructed more recently and have less desirable features.
Zillow says its customer service agents told Anderson the easiest way to adjust her Zestimate would be to add details, like square-footage, to her listing on Zillow.com.
“She said that her estimate was too low and we recommended to her what we always recommend, which was that she go in and change her home facts,” a Zillow spokesperson said.
Andersen says this feedback misses her point (and the crux of her legal argument) that Zillow should not be making estimates of home values at all.
“For them to now say that they should fix it is flawed in several different regards,” she told GeekWire. “It’s really a misleading comment to make to the press because it has no factual application here. Two, it is a red herring because really the question is, from a legal perspective, which is what legal basis, under Illinois law, does Zillow have to opine as to anyone’s home value?”
Andersen complained to the company about her Zestimate for the first time in December of 2016, according to Zillow. Andersen claims Zillow bumped her Zestimate up to $650,000 after she complained. Zillow denies this, claiming employees never manually alter a Zestimate.
A spokesperson for the company did say that Zillow encourages homeowners to work with registered real estate agents, which Andersen had at the time. She later terminated her agent to save on costs and lowered her asking price. Her Zestimate then “started to plummet,” according to the complaint.
Andersen says Zillow has been unresponsive since she stopped working with an agent.
“Zillow is not communicating with Andersen because she no longer has a broker and, thus, is not a source of direct income to it,” the complaint says.
Zillow vehemently denies Andersen’s claim that communication ended as a result of her terminating her broker. According to Zillow, the company corresponded with Andersen after she transitioned to a for-sale-by-owner listing.
Zillow provides a Zestimate for every house in a neighborhood, displayed as points on a map with attached dollar amounts. The Zestimate provides users with a visual guide to the value of homes so that they can better understand the housing market. The idea for the Zestimate began when Barton and Zillow co-founder Lloyd Frink were both looking to purchase new homes. They were shocked that there wasn’t a tool to give house hunters a basic idea of a home’s value based on the existing data.
The feature was received with a lot of fanfare — and more than a few disgruntled homeowners. But Zillow has been stressing the same point since the Zestimate’s launch.
“[It’s] just a starting point to figure out what a valuation is,” Barton told GeekWire.
This story has been updated with comments from Andersen and additional information from Zillow.