I've written numerous blog posts about the terrible inaccuracies in the various automated home value estimators that you find on the Web. About a year and a half ago I compared several of them: Those Home Value Estimators Really Suck. The fundamental problem is that these estimators only look at the easily discernible data on a home: square footage, lot size, # bedrooms, # bathrooms. They don't take into account such critical elements as condition of the home, immediate neighborhood, and level of finishes - just for example. Garbage in => garbage out.
These inaccuracies can cause numerous problems for real estate agents and their clients. For instance, home buyers may fixate on an artificially low estimate and refuse to offer market value for a home that they want to buy. Or home sellers may fixate on an artificially high estimate and expect to sell for that inflated amount.
Well, an attorney in Glenview got ticked off when she tried to sell her home recently for more than the Zestimate. She felt like the "low" Zestimate was preventing her from getting the appropriate interest in her home so she did what attorneys do and filed a lawsuit. Notice that I put the word "low" in quotes above because we don't know if Zillow is low or she is high. Nevertheless she wanted Zillow to either revise their Zestimate or remove it from their site.
However, this week Crain's reported that she dropped her lawsuit in order to represent some Schaumburg home builders who have essentially the same complaint. They filed a class action lawsuit against Zillow for homeowners in Illinois claiming that Zillow should not be posting their home value estimates without homeowners' permission and that they shouldn't be doing appraisals without a license. Zillow claims that automated valuations like their Zestimates are exempt from licensing requirements.
Best of luck to them but you know..there is actually a much easier way to deal with the Zestimate than a lawsuit. You can simply claim your house on Zillow and change the characteristics until you get a value much higher than what you want for your home. Make your lot bigger, add square footage to the home, and add a few bedrooms and bathrooms so that the number is basically invalid. Of course, if you're an attorney this may not be as much fun as a lawsuit but it will definitely teach any buyer a fast lesson in trying to take the easy way out of determining your home's value.
I'm dead serious and I've actually given this advice to our clients before but I don't think they take me seriously. They're afraid they are going to get in trouble somehow but from whom? And some worry that the tax assessor is going to look at that and raise their tax assessment but it doesn't work that way.
Of course, my advice only helps homeowners who think their Zestimate is too low and not realtors who need to defend reality to irrationally exZuberant home buyers and sellers.
Late next week I'll take a look at Zillow's own measure of their home estimator accuracy and how I think they are sorta gaming the system a bit. Looks to me like they took my advice of a few years ago.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.