Real estate agents are always joking about the Zestimates that show up on Zillow. Why, because the Zestimate always seems to be off one way or another.
Recently, a class action lawsuit was brought against Zillow because a homeowner is claiming that the zestimate is off so much on her home, it’s keeping her it from selling. Barbara Anderson, a real estate lawyer in Cook County Illinois states in the lawsuit that despite Zillow claiming a Zestimate isn’t an appraisal, 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. Anderson says that not only should Zillow be licensed to perform appraisal, but should get permission from the homeowner before posting the information online.
Spokesperson for Zillow, Emily Heffter, says the lawsuit is without merit. As a publicly traded company based out of Seattle, Zillow has been offering Zestimates since 2006, and pieces the Zestimate together using public records and other data using a proprietary formula.
Even though the Zestimate is supposed to help consumers get educated information while searching for homes, it has been known to be off by as much as 20-30 percent. (Washington Post)
So if you’re a consumer looking for homes and the zestimate is showing a completely different amount from the listing price, don’t let that scare you off. Remember, the Zestimate is not put together from an actual licensed appraiser. If you’re a homeowner thinking about listing, a bonus of listing with me is when your home shows up on Zillow, the Zestimate is “below the fold” as part of Coldwell Banker Residential Brokerage’s agreement with Zillow. What this means, is the Zestimate toward the bottom of the property detail page as opposed to directly under the listing price.
For now, the Zestimate isn’t going away, but what we’re hoping consumers understand is they shouldn’t base whether or not to purchase a home based on what it shows on Zillow.
For more information on the lawsuit, check out this clip from Nightly News with Lester Holt.