A judge has dismissed without prejudice four lawsuits against real estate website Zillow regarding its Zestimates feature, according to a report by Geek Wire. Zillow’s Zestimates provides a market look at the estimated price of a home, which the lawsuits claim was deceptive and misleading in addition to a litany of other claims.
One of the most charged claims of the suits was that Zestimates impair a seller’s ability to sell their home for the highest value because this website feature does not incorporate or recognize current appraisal standards. A judge in the Northern District Court of Illinois, Eastern Division, disagreed and ordered that all the cases be dropped against the company.
How the suit may affect the real estate market remains to be seen, but these nine members of Forbes Real Estate Council weigh in on what they think of the Zestimates practice and the judge’s decision in the suit. Here is what they had to say:
1. What If Zestimates Weren't Flawed?
The real question is if the Zestimate didn't have so many flaws — what implications would that have for sellers? Would this eliminate the need for a real estate agent if the correct price could be accurately determined by an algorithm to a much higher degree of accuracy? - Colin Bogar, Property Passbook
2. Zillow's Activities Should Be Allowed
We agree with the judge that Zillow's activities should be allowed under current laws (which are subject to change); however, that's not to say we don't sympathize with some of the plaintiffs. Zillow readily admits it can't automatically incorporate important factors; in New York City, almost half of homes sell for 10% above or below the Zestimate. - Larry Solomon, TheGuarantors
3. The Devil Is In The Details
Multiple sources for these computer-based valuations exist. A computer has no way to look at all of the relevant data and cannot adapt to nuances. For instance, a home built by one builder may be valued differently than a home by a different builder in the same neighborhood. Also, the data it uses may be wrong. The best source is a professional in the market who can evaluate all the details. - Michelle Ames, HorsePower Team Texas/Independent Realty
4. All Estimates Are Just That: Estimates
If companies had to pay for the ignorance of buyers, they would all be broke. The word "estimate" is what its name says and and it is free. Consumers get what they pay for. An "appraisal" is performed by licensed appraisers and you have to "pay" for it. And even an appraisal is an estimated market value: a very educated, professional estimate, but still simply used to help a lender and a buyer make a decision. - Kevin Hawkins, WAV Group, Inc.
5. Nothing Beats Local Market Knowledge
In my opinion, all of the online algorithms like Zestimates and valuations from other platforms are incorrect. Moreover, a lot of the appraisals that are conducted by licensed appraisers are also incorrect and often come in lower than what they should. Nothing beats local market knowledge. The folks on the ground are the ones behind all of the stats and demographics, not some online algorithm. - Engelo Rumora, List'n Sell Realty
6. Zestimates Are Just A Starting Point
Zillow itself mentions that "a Zestimate is just a starting point in figuring out the true value of a house." You can always be proactive and update your facts, which may affect the Zestimate. My team has used the "edit your home fact" feature for few of our investment properties and were able to increase the Zestimate based on the updates and remodel information we provided to Zillow. - Nikhil Choudhary, Zenith Engineers Inc
7. Zestimates Vs. Appraised Value
I have argued with many appraisers regarding their appraised "value" and they would not change their mind. On the other hand, Zillow will allow homeowners to submit a request to change the Zestimate on their listing through a pop-up text box. Having a licensed realtor helps immensely, too, as he or she may be aware of any details you've overlooked. - Angela Yaun, Day Realty Group
8. Your Property Is Worth What The Market Will Pay
All appraisals, regardless of who makes them, are not 100% accurate, regardless if they were done by a bank appraiser, realtor, Zillow or a city assessment. Unlike silver and gold, you cannot put real state on a scale and weigh it for its value. Due to interest rates, natural disasters, changes in the zoning and current sales in the neighborhood, your home value is always changing. - Chris Ryan, Luxury Lifestyles Group / RE/MAX Crest Realty Westside
9. Caveat Emptor: The Buyer Is Responsible
We sell thousands of houses to buyers annually. In life, far too often, people are unwilling to take responsibility for their choices. There is no shortage of resources for a buyer to do all due diligence needed before purchasing. Markets move quickly. Not all information is accurate. Anyone purchasing based on information available on a website, should have their case dismissed with prejudice. - Mark Bloom, NetWorth Realty
