Northwest suburban Chicago home builders in Schaumburg have filed a class action lawsuit against the real estate marketing company Zillow.
According to the suit filed on behalf of CastleBldrs.com in Schaumburg, the Zillow.com online estimate tool “Zestimate” provides home estimates that are misleading, and falsely pose as home appraisals in violation of the legal description of an appraisal in Illinois.
The attorney representing Castle Builders is Barbara Andersen, who had also filed an earlier suit against Zillow on her own behalf. Her suit had claimed that a Zestimate of her townhouse value was unrealistically low and had created a “roadblock” to selling her home.
Anderson has since filed a motion to dismiss her suit in order to represent the Castle Builders case.
Class action lawsuit against Zillow
The new class action suit is on behalf of all of the millions of homeowners in Illinois. It claims homeowners should be asked their permission to publicly post financial data about their homes.
“Zillow has said they use the Zestimate to draw people into their website,” Andersen told Crain’s Chicago Business. “But from a legal perspective, they shouldn’t be making these estimates at all.”
The Zestimate lawsuit argues that by posting its estimates, Zillow has intentionally violated the “seclusion” of every homeowner in Illinois, without giving them a means to opt out.
Illinois law states “It is unlawful for a person to (i) act, offer services, or advertise services as a State certified general real estate appraiser, State certified residential real estate appraiser, or associate real estate trainee appraiser, (ii) develop a real estate appraisal, (iii) practice as a real estate appraiser, or (iv) advertise or hold himself or herself out to be a real estate appraiser without a license issued under this Act.”
“Even if Zillow’s numbers were perfect, dead-on accurate, they’re still opining on the value of homes, and they don’t have the license to opine,” attorney Andersen said.
Related: Low Inventory for Midpriced Suburban Chicago Homes Driving Up Prices
Zillow denies Zestimates are appraisals
Zillow maintains that its approximations are not actual appraisals, nor do they claim to be.
They say Zestimates are based on public records and other data using “a proprietary formula.” Zillow also provides a disclaimer about the accuracy of its approximations.
A Zillow spokesperson told MarketWatch “We believe the claims in this case are without merit. We always say that the Zestimate is a starting point to determine a home’s value, and isn’t an official appraisal. It’s a computer-automated estimate of your home’s value.”
Many people in the real estate industry will be watching for the outcome of this case.
Zillow Zestimate Class Action Lawsuit Update
Story updated – August 2017 – The Zillow class action lawsuit has been dismissed by a federal judge in Chicago. Read the story here: Zestimate lawsuit dismissed
Related stories and sources:
Class-action suit aims to halt Zestimates in Illinois – Chicago Business
Do Zillow ‘Zestimates’ mislead home buyers? Lawsuit claims yes – MarketWatch
Zillow’s ‘Zestimate’ facing class-action lawsuit, reports say – Chicago Agent Magazine
Glenview homeowner sues Zillow over ‘sloppy’ estimate – Crain’s Chicago Business
Chicago Area Home Sellers File Lawsuit Against Zillow’s Zestimate – Chicago Now
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