“Zestimates” can stay, judge rules

Zillow’s notoriously error-prone appraisals are not illegal

Aug.August 24, 2017 11:00 AM

Spencer Rascoff and Zillow’s “Zestimates” feature

“Zestimates” are just an estimate, with a Z.

So ruled a federal judge, who dismissed an Illinois lawsuit by homeowners who sued Zillow Group over its controversial home valuation tool. In May, a group of homeowners alleged that the Zestimate computer algorithm undervalued their homes and made them harder to sell.

“The word ‘Zestimate’ — an obvious portmanteau of ‘Zillow’ and ‘estimate’ — itself indicates that Zestimates are merely an estimate of the market value of a property,” wrote Judge Amy St. Eve, who also pointed to disclaimers by Zillow that Zestimates are not official appraisals.

In a statement, Zillow said it was pleased with the judge’s ruling. But the plaintiff’s attorney Barbara Anderson argued that “Zillow has unilaterally imposed its opinions on the value of homes without the consent of homeowners,” she told Reuters. “It impairs people’s ability to sell their homes because the estimates do not comply with recognized appraisal standards, and some are way too low.”

In May, two weeks after Anderson’s clients filed suit, Zillow offered a $1 million prize to anyone who could improve its Zestimate algorithm, which the company claims has a median error rate of 5 percent, down from 14 percent in 2006.

Last year, Zillow CEO Spencer Rascoff paid almost $20 million for a Los Angeles estate, which had a Zestimate of $18.4 million. [Reuters]E.B. Solomont

Related Articles

Eric Gordon

Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world

Big Tech locations in NYC

MAP: Here’s a look at all the Big Tech locations in NYC

What will proptech look like in 2019 and beyond?

What will proptech look like in 2019 and beyond?

From left: 55 East 74th Street, 9 East 82nd Street, 1 Central Park South, 78 Irving Place with Adam Neumann and 111 West 57th Street (Credit: StreetEasy, Wikipedia, Getty Images)

Adam Neumann’s triplex, Russians’ Plaza pad were priciest homes listed last week

3 East 69th Street and 252 East 57th Street 

With asking prices in freefall, luxury market sees strong week

Keller Williams CEO Gary Keller

Keller Williams will cut off agents who leave

Wall Street bonus season is the stuff home sellers’ dreams, as they picture eager buyers armed with hefty bonus checks and willing to pay top price. But in a buyer’s market that vision may be more like a mirage (Credit: iStock)

Here’s what Wall Street bonus season means for real estate this year

Adam Neumann and 78 Irving Place (Credit: Getty Images and StreetEasy)

Adam Neumann is asking $37M for Gramercy Park triplex