Misleading 'Zestimate'

A house for sale.
Photo credit Feverpitched/Getty Images
By KYW Newsradio 1060
By Amy E. Feldman, Judge Technology Solutions
PHILADELPHIA (KYW Newsradio) — Guess how much sympathy the court had for the homeowners who sued Zillow? It starts with a "z" and it's not a zillion. 

Zillow is a website that uses an algorithm to determine an estimated value for real estate. The estimate, which it calls a Zestimate, is based on public data like the location, tax assessment and recent sale prices for comparable real estate.   

Since there's no actual inspection of the property, the Zestimate does not take into account any unique feature of a person's particular house that might actually increase its value.  

According to Zillow, its median error is six percent, although the estimate is off by more than 20 percent in about 15 percent of sales. When homeowners in Illinois listed their home for $1.45 million but found that the Zestimate had it pegged at $1.33 million, they sued Zillow, saying the Zestimate is misleading and hurt their ability to sell the house. 

In what is both a lesson to homebuyers who rely on the Zestimates and the homeowners who are unhappy with them, the court said Zestimates are opinions, not facts, so they didn't violate the law. 

They awarded the homeowners Zero. Zilch. Zippo.