Homeowners Can’t Sue Over Low Zestimates–Patel v. Zillow
Have you ever looked at Zillow’s zestimate for your residence? I treat zestimates as entertainment more than truth, much like going to an astrologer. But if the zestimate is way below a property’s listing price, that’s going to spook some potential buyers, no?
An Illinois putative class action was brought against Zillow over the zestimate on three grounds: (1) the zestimate was an unlicensed appraisal, (2) the house profile and zestimate constituted an intrusion into seclusion, and (3) Zillow’s practices violate state consumer protection laws. Zillow wins on a 12(b)(6) motion to dismiss.
Unlicensed Appraisal: The applicable licensure statute expressly excludes “the procurement of an automated valuation model.” Furthermore, the law doesn’t support private causes of action.
Privacy Invasion. There’s no intrusion when the zestimate is based on public data sources. The plaintiffs also don’t explain how the intrusion is “offensive” or plead the required “anguish and suffering.”
Consumer Protection Laws. The court says the zestimates are not false, misleading or confusing:
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. Moreover, Zillow’s website, as alleged in the CAC and the webpage attached to the CAC, discloses clearly and in great detail that Zestimates may not be accurate. Zillow makes clear that a Zestimate “is a starting point in determining a home’s value and is not an official appraisal.” Additionally, Zillow’s website even provides detailed statistics regarding the accuracy of Zestimates nationally and in particular metro areas, including Chicago.
As a result, zestimates are “nonactionable opinions on value.”
I did a quick Westlaw search and found some cases where zestimates had been used as property value estimates in official contexts. This rarely goes well. As one court said:
Zillow “zestimates” are gaining frequency as support for lenders’ valuations in motions for relief from stay. I have denied motions relying on Zillow valuations for reasons similar to those in connection with tax assessors’ valuations. More significantly, Zillow is a participatory cite [sic] almost like Wikipedia. Whereas Wikipedia allows anyone to input or change specific entries, Zillow allows homeowners to do so. A homeowner with no technical skill beyond the ability to surf the web can log in to Zillow and add or subtract data that will change the value of his property. This of course makes Zillow inherently unreliable.
In re Darosa, 442 B.R. 173 (D. Mass. 2010); see also In Matter of Rokowski, 168 N.H. 57 (N.H. 2015) (“we conclude that Zillow’s ‘Zestimate’ is not ‘capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned’”); Uzyel v. Kadisha, 2010 WL 3406025 n.20 (Cal. Ct. App. 2010) (“We, therefore, see no basis for recognizing Zillow’s ‘Zestimates’ as a sufficient basis on which to obtain a legitimate valuation of the properties at issue”); In re Nielsen, 526 B.R. 351 (D. Hi. 2015) (a zestimate “is not particularly persuasive and may not even be admissible”); In re Slovak, BKY 1247074 (D. Minn. 2013) (“Internet searches are insufficient evidence of property value because they are at best questionable and at worst evidence of nothing”).
When my mom died, I tried to capture all of the zestimates in case I wanted to rely upon them for her estate tax return. I found the estimates so dubious that I ended up paying for appraisals for all of her properties.