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The Real Deal Los Angeles

Zillow sued for concealing Zestimates

Listing service gave some brokers preferential treatment, according to suit
January 16, 2018 05:00PM

UPDATED: Wednesday, January 17, 2017, 11:35 a.m.: Zillow Group has responded to the suit through a spokesperson: “We believe the claims in this case are without merit. The Zestimate is indended to be a starting point for determining a home’s value… [and] we intend to vigorously defend ourselves against this lawsuit.”

Zillow is being sued in New Jersey for allegedly concealing its controversial Zestimate figures on residential listings at the request of brokerages that have “contracts” with the online real estate information site.

The plaintiff in the case, listed as EJ MGT LLC, claims that Zillow violates federal antitrust laws. The suit alleges Zillow hides its so-called home price Zestimates from certain brokerages, and from sellers, according to the online news site the American Genius. EJ MGT LCC appears to be the owner of at least one property for sale referenced in the suit that had its Zestimate prominently displayed beneath its actual listing price.

Zestimates are automated Zillow valuations on properties that use a “proprietary formula” along with troves of data including public records, according to the company. The listing service shows its Zestimate on a property, whether that property is for sale or not.

Critics have long said the system is wildly inaccurate, misleads buyers and slows down or even kills sales.  A buyer might question paying $100,000 more for a property over its Zestimate, and a seller might ask why sell a property for $100,000 less than it should be worth. One broker called Zestimates “the bane of my existence.”

The suit includes a screenshot of a message with a Zillow support staffer, who tells a man named Igor that “due to agreements Zillow has with certain brokerages, Zestimates may not display under the listing price on these brokers’ listings.” The employee claimed she she was “unable to edit or remove the Zestimate” on his listing as the “agreements and modifications” were outside her administrative capabilities, according to the filing.

The suit names a number of high-profile brokerages as “co-conspirator brokers.” They allegedly had contracts with Zillow to hide Zestimates on listings, including Sotheby’s International Realty, Century 21 Real Estate, and the Corcoran Group.

A screenshot of an off-market listing shows the Zestimate prominently displayed, but removed once that property hit the market with a “co-conspiring” brokerage.

In August, an Illinois judge dismissed a separate federal lawsuit filed by homeowners against Zillow, who claimed Zestimates undervalued their homes, making them harder to sell. [TAG] — Dennis Lynch