Zillow Faces New Lawsuit Over ‘Zestimates’

January 19, 2018

In a lawsuit filed this week, a New Jersey brokerage is accusing Zillow of hiding its “Zestimate” home valuation tool on certain residential listings at the request of brokers who have special contracts with the site. The brokerage, EJ MGT, says Zillow’s actions violate federal antitrust laws.

The case stems from a listing the brokerage had in Cresskill, N.J., that appeared on Zillow. The eight-bedroom, 10-bathroom home was listed for just under $7.8 million, but the home’s Zestimate came in at $3.7 million. EJ MGT argues that the discrepancy in value caused a loss in business from several interested buyers. But EJ MGT asserts in its lawsuit that some brokers who partner with Zillow are able to “conceal” the Zestimates on their listings, which typically appears just below the list price.

“In essence, Zillow is disseminating misleading and inaccurate pricing information that has gained prominence because of Zillow’s market power, and charging downstream participants to hide this negative information that Zillow, itself, acknowledges to be inaccurate,” the lawsuit states. “Further, members of the public have no way to prevent Zillow from obtaining this information, and they cannot alter its display once Zillow presents it unless they hire a broker that is party to the Zestimate agreement.”

Zillow told GeekWire that some of its partnership programs do include the option of moving the Zestimate elsewhere on the page. However, the tool does appear on every listing except for those in which there is not enough data available, Zillow spokeswoman Emily Heffter says.

The company issued the following statement in response to the lawsuit: “We believe the claims in this case are without merit. The Zestimate is intended to be a starting point for determining a home’s value, which is why we provide it, for free, on more than 100 million homes across the country. As a company, we always seek to create advertising products that add value for consumers and advertisers, and we intend to vigorously defend ourselves against this lawsuit.”

Last year, Zillow faced a lawsuit that alleged its Zestimate tool constituted an appraiser valuation and created a “tremendous roadblock” to selling a home. The case was eventually thrown out by a judge.

Zillow states on its website that its Zestimate is an estimate of a home’s value, which it calculates through a proprietary algorithm. Zillow updated its algorithm last year and has called its home valuation tool more accurate than ever before.

Source: “Zillow Sued Over How it Displays Zestimate Home Valuation Tool in Some Partner Listings,” GeekWire.com (Jan. 16, 2018) and “Zillow Is Sued for Concealing Zestimates,” The Real Deal (Jan. 16, 2018)