SARASOTA, Fla. (WFLA) — The popular real estate website Zillow is under fire over claims it provides bad information. It was slapped with a class-action lawsuit alleging that its home value estimates are wildly off, and it’s led to a headache for homebuyers and realtors.
Kayla Virkus and her husband David were recently searching for their first home, and they used Zillow. The site provides “Zestimates,” which offer a look at the home’s value.
“The prices were a little bit all over the place. You look at one house and another house that were similar in size and everything and the prices would be way different,” said Virkus.
Realtor Ryan Ackerman frequently deals with clients who treat these “Zestimates” as actual appraisals.
“Zillow is making our job, I would say, harder, because we’re really having to spend more and more time, not just going against what the current sale price is and explain it to our client, but you have now an outside party that’s adding their input as to what the value of the property is,” said Ackerman.
The company is now facing a class-action lawsuit out of Illinois which claims these inaccurate “Zestimates” are hurting the real estate market and the company should not be doing appraisals without a license.
Zillow provided the following statement:
“We believe the claims in this case are without merit. We always say that the Zestimate is a starting point to determine a home’s value, and isn’t an official appraisal.
Estimating value based on public information and statistics is a well-accepted practice. Even the Illinois appraisal statute on which the complaint relies approves of these practices, acknowledging the difference between an appraisal (an assessment of the value of a specific home, based on a physical inspection by a licensed professional) and a statistical estimate based on public information.
The Zestimate is a computer-generated, estimated market value that we create for more than 100 million homes. It’s a starting point for determining your home’s value. When it comes time to sell, we always recommend homeowners work with a local real estate agent to determine the best price and marketing strategy.”
Experts say buyers and sellers should use public records and property appraiser websites. It would also help to use the services of a realtor.
“I think consumers need to do more educating on their own to figure out what the value is,” said Ackerman.
“Do your homework, rely on your agent and understand that residential real estate is an emotional sale and at the end of the day, the consumer or the buyer is going to really dictate the value of the property,” Ackerman added.
Virkus feels Zillow should be used sparingly.
“My advice would be to go to Zillow to see what area you want to be in to look at the houses and things like that, but don’t get too hung up on what those prices are, because it’s not going to be reliable, I don’t think,” said Virkus.
Zillow is offering a $1 million prize to anyone who can improve its algorithm to make the “Zestimates” more accurate.
They emphasize that this prize was planned in advance and has nothing to do with the lawsuit.
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