Court Dumps Lawsuit Against Zillow Over Its Inaccurate 'Zestimates'

from the conclusory-arguments-are-empty-arguments dept

Earlier this year, real estate litigator and aggrieved homeowner Barbara Andersen sued Zillow for providing a lower “Zestimate” than she believed her house was worth. She alleged Zillow violated Illinois state law by portraying its estimates as appraisals, even though it lacked the proper licensing to perform appraisals. Andersen sought an injunction blocking Zillow from posting information about her home (even publicly-available information) and offering a “Zestimate” on its selling price.

Andersen has just had her case tossed, although she’s now representing others in a proposed class action against Zillow. At some point between February and earlier this week, Andersen’s case was moved to a federal court and she’s now listed on the bottom of court documents (as counsel of record), rather than up top as a plaintiff.

The new lead plaintiffs are three Patels disputing Zestimates of their multi-million dollar properties. (This rearranging of plaintiffs and lawyers [and lawyers who were also plaintiffs] is unsettling, especially for those of us who learned what we know of the real estate business via repeated viewings of “Glengarry Glen Ross.”)

The Patels (and “others similarly situated”) aren’t happy with Zillow. The Patels (collectively) have multiple properties on the market, all listed at prices considerably higher than Zillow’s Zestimates. They claim, as Andersen did, that Zillow violates state law by offering something homebuyers might believe is an appraisal. A variety of interconnected laws results in the Patels attempting to coax a federal court into killing Zillow’s estimates. As Eric Goldman summarizes, the Patels have gone down on strikes.

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

Goldman also points out no serious person is likely to confuse a Zestimate with an appraisal… at least not if they expect to be taken seriously. Courts in cases dug up by Goldman have called Zillow Zestimates everything from “inherently unreliable” to “incapable of accurate” valuations. One judge concluded “internet searches are insufficient evidence of property value,” spreading the besmirchment to Zillow’s competitors and pre-trial Googlers.

Zillow pled a First Amendment defense for its publication of lousy Zestimates and other public data. The court [PDF] doesn’t make any attempt to address this pleading as it finds plenty it doesn’t like about the state law claims.

Zillow argues that the First Amendment requires dismissal of all of Plaintiffs’ claims. (R. 18, Mem. Supp. Mot. Dismiss, 3.) Additionally, Zillow contends that First Amendment concerns aside, Plaintiffs fail to plead the required elements of their claims. (Id. at 9.) While Zillow makes persuasive arguments with respect to the First Amendment, the Court need not and should not rule on them conclusively because Plaintiffs’ claims fail under Illinois statutory law.

As the court points out, Zestimates are nothing more than “nonactionable statements of opinion” — statements that result from no intrusion in personal privacy (because publicly-available info is used) nor violation of real estate regulations in Illinois.

All claims have been dismissed without prejudice, meaning real estate litigator (and litigant) Barbara Andersen is welcome to try again. But she — like the Patels she now represents — will need to find a better angle than alleged state law violations to take another run at estimates they all subjectively feel are on the low end.

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Companies: zillow

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Comments on “Court Dumps Lawsuit Against Zillow Over Its Inaccurate 'Zestimates'”

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Shane (profile) says:

Residential Real Estate Racket

Zillow is annoying brokers, so they are going after them. That’s my take.

How is it that real estate brokers the nation over OWN the private information of how much these houses sold for previously? You will note when it comes to commercial real estate, they are not allowed to share this information. But where residential real estate is concerned, they openly ADVERTISE that they know everyone’s private information about home values.

It’s all just part of the gigantic machine meant to force us to do business through established fleecing industries.

Seriously, what the HELL does a real estate agent or broker do that is worth the kind of money they make?

And yes, I have worked in real estate… Among so many other aspects of American commercial life. It’s all smoke and mirrors and excuses to rip off the general public. “To live with the classes, sell to the masses”

Anonymous Coward says:

Re: Residential Real Estate Racket

How is it that real estate brokers the nation over OWN the private information of how much these houses sold for previously?

They don’t. It’s just that the only people who actually know what the house sold for are the real estate agents, the buyer, the seller, and the banks/loan agency (and eventually the IRS). The banks and the real estate agents generally aren’t allowed to publish that information by law, and don’t have an incentive to do so anyway, and the buyer and seller generally don’t publish it either.

You will note when it comes to commercial real estate, they are not allowed to share this information. But where residential real estate is concerned, they openly ADVERTISE that they know everyone’s private information about home values.

There is no contradiction in your statement. Claiming that I know about the home values is not the same as "sharing" said home values. When they offer that information to you, then it’s "sharing." Just knowing that information is, quite frankly, inevitable for an even halfway competent agent. The only alternative is to destroy real estate agent’s ability to form long term memories prior to being eligible for the job.

Moreover, commercial real estate groups also do this, just less loudly since commercial buyers generally aren’t swayed much by that kind of advertising.

AnaChronic (profile) says:

Re: Re: Re: Residential Real Estate Racket

GIS Maps are the quick, easy way.

All land sales are public record, and nearly every town posts easily accessible records online of owners’ names and dates and dollar figures of sales. Also appraisals for tax purposes.

As a brand new home owner, I know the names of owners of every single plot of land in a 10 mile radius around my house, and how much they paid and when. Took me about a half hour sitting on my couch watching a movie.

The old school way would be to simply go to town hall and ask. This is not some secretive cult fer chrissake. Granted, knowing sale dates and purchase prices is not the same as a home’s current market value, especially if it last sold fifteen years ago, which is where realtors and appraisers come in.

nasch (profile) says:

Re: Re: Residential Real Estate Racket

There are data services that can supply this information (Black Knight Financial Services, Core Logic, Data Trace, some others). Because of my job, I could look up how much your house sold for if you were to give me your address. I’m not sure if just anyone can sign up for these services though.

Anonymous Coward says:

Re: Re: Re: They're just aggregators (was Residential Real Estate Racket)

The "data services" you’re talking about are really just aggregators that go out to all the various assessors’ offices across the country and pull in the public records of deeds of sale (including prices) from them, then provide a single database/interface with broad coverage and a likely-simpler UI.

I’m not sure if just anyone can sign up for these services though.

While said services are useful for someone like you who would otherwise have to go chasing after a zillion assessors a day to get what you need to do your job — I don’t think making it so the general public couldn’t sign up for that would make much of a difference for random-Jane’s ability to find out how much her neighbors’ houses sold for last, considering she only has one assessor to deal with 🙂

That Anonymous Coward (profile) says:

Re: Re:

Allow me to introduce Babs.
“real estate litigation attorney”

She thinks they are to low & thats why she hasn’t gotten the amount she wants for a home she was trying to sell.

I made her mad last time…

“Of course she immediately shows up and complains that people provide coverage without speaking to her or getting her approval. Its like she skipped constitutional law.”

I think the anon was most likely her since I was making fun of her having shown up & whining like a moron.

Zillow doesn’t agree with her numbers, she is demanding a 3rd party has to do exactly what she wants to keep the price of the home higher so she can make money. The reason for bad offers aren’t because shes a nightmare to deal with & they know she has overvalued the property in her mind… its all the fault of Zillow.

Anonymous Coward says:

Re: Re: Re:

Barbara Andersen has inspired me to develop a new way to flip houses! I’m gonna write a book about it, advertise it in infomercials and tour the country giving seminars!

It goes something like this:

1. Buy property
2. List it at a price no one will ever pay
3. Sue zillow over their lower estimate
4. Win lawsuit
5. Profit!

Not really sure how to accomplish step #4, but as soon as Barb figures it out my method is a sure success!

BJC (profile) says:

So, doesn't actually get to the "defamation" question

Looking over the motion to dismiss, it seems the Plaintiff sued for:
(1) unlicensed real estate brokering
(2) invasion of privacy
(3) state unfair trade practices
(4) state consumer fraud

Which are, as the court correctly states, not really applicable to this case.

The interesting question, which this case isn’t answering (maybe another case will) is whether way-off-mark Zestimates are essentially “commercial defamation” or “slander of title” or however you want to call it.

If Zillow had a “Superfund site Zestimator” where it, from some secret sauce, estimated the likelihood that your property was sitting on a toxic waste dump, and from bad data made people think that your backyard was full of PCBs, I believe there’d be some tort liability. The dollar value of the property is more ephemeral, less reliable, but it’s in the same family of statement – the property’s value is stated as less than it actually is, distorting the ability of the seller to sell at fair value.

Barbara Andersen says:


1. My case was voluntarily dismissed. Not tossed. I was asked to re-file as prospective class. You did not research this correctly.
2. Dismissal without prejudice means right to replead
3, I don’t represent brokers.
4. I think you are triviliazing a real problem/people.

I don’t know why this blog is so obsessed about defending Zillow…this is the most biased “journalism” by far..,

Media Vermin (profile) says:

Thank you Barbara Andersen and Good Luck

I am emotionally disgusted with the way I perceive how Zillow treats me as a consumer with what I believe are inaccurate Zestimates. My home is an upscale newer craftsman build with numerous amenities on large acreage. The Zestimate compares my home to older lower quality box homes, some on small lots. My home is worth what?– two or three times the per s ft price of some of the lesser value homes. Is this an accurate comparable price per s ft? I think not. Has it caused consumers harm by having potential buyers being turned off from purchasing because the estimate is significantly lower than asking price? There is no mechanism for the home owner to correct such deficiencies and inaccuracies in the estimates that I am aware of.

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