So it finally happened.
A suit was filed in Chicago by a homeowner who is fed up with the Zillow platform and its impact on her ability to sell her home.
I think I speak for my peers when I say, ‘YES!!!’
Since its launch in the early 2000’s, Zillow has been a bane of the Realtor’s existence. Zillow’s algorithm, which places a hypothetical value on homes (called a Zestimate), quickly became the public’s go-to place for home valuations and generated web traffic that dwarfed what any brokerage site could. By intercepting the web traffic, Zillow began to intercept client inquiries (i.e. ‘leads’) and began to reroute them to who ever was willing to pay the most.
Zillow, unlike agents and brokerages, is not bound by any real set of rules. From state laws to local MLS rules and regs, Realtors are largely bound by a set of protocol that enforces accuracy and integrity in both our data and our behavior. Zillow? Not so much.
This lack of regulation has allowed Zillow to abuse the system in a number of different ways since day one of its existence, so when the lawsuit was filed, us Realtors couldn’t help but stand up and clap.
One of the arguments this Chicago homeowner makes is that Zillow is actually performing an appraisal on a home. Appraisers, like Realtors, are governed by state laws and require certification, licensure and continuing education, none of which have ever been obtained by Zillow. Furthermore, the comparable sales that are used to help determine a home’s value are disclosed in an appraisal, while Zillow’s estimate discloses nothing about what sales were used or what adjustments were made during the process.
So while I am sure the outcome of the case will take years, the core issue is now front and center and will hopefully raise public awareness of the real value of Zillow’s estimates. As we have said many times to many clients: Zillow, as well as all of the other sites that provide housing value estimates, should be used in your analysis, but not as your analysis.
More on the lawsuit can be found here.