Errors, flawed data, and lawsuits part of Zillow track record

PHOTO CAPTION: Zillow CEO Spensor Rascoff purchased this Los Angeles home for $2.4 more than the Zestimate after selling his Seattle home for $650,000 less than the Zestimate – a more than $3 million difference in total value for both homes. Photo courtesy of The Agency and Curbed Los Angeles.


The data on Zillow’s website is frequently wrong, their Zestimates are hopelessly inaccurate, the company is the target of lawsuits, and Zillow doesn’t provide anything to the consumer that the consumer can’t find on many real estate brokerage websites and apps. If a product was this bad, you would think the owner would only continue to offer it because it makes a profit– but Zillow never has.

Yet many consumers continue to invest time and energy into this hopelessly flawed website. However, at least one homeowner is pushing back (maybe more – class action lawsuit, perhaps?). An Illinois woman sued Zillow in March for estimating her house is worth $100,000 less than comparable homes. The suit alleges Zestimates are proxy appraisals and Zillow needs an appraiser license to publicly offer statements of value. The suit comes on the heels of Zillow settling a lawsuit by which alleged Zillow stole trade secrets. Zillow had to fork over $130 million of non-existent profit from shareholders.

Even Zillow acknowledges that its Zestimate is flawed. In fact, Zillow says that the median margin of error for Zestimates is nearly 10%. One in five is off by more than 20%. Zillow CEO Spencer Rascoff knows this math all too well. He sold his Seattle home for $1.1 million – $650,000 below the Zestimate. He then purchased another home for $2.4 more than the Zestimate.

Real estate brokerage firms can easily duplicate a “Zestimate” feature on their websites but good luck trying to find one that does. Real estate brokerages understand that such estimating tools aren’t reliable and cause more harm than good.

Errors on Zillow? Where do we begin? One of Zillow’s worst flaws is its inability to recognize listings that are withdrawn from the MLS. Listings are sometimes withdrawn from the MLS because the seller has to do work on a home or is taking a break from the market. When the listing is re-entered, Zillow doesn’t automatically pick up the new listing data.

Only half of MLS brokers in the United States send their MLS listings to Zillow while and real estate brokerage websites cover 100% of the market (which begs the question why any consumer would use Zillow). Still, some agents desperate for an edge resort to gimmickry by flouting MLS agreements and advertising listings on Zillow before or without entering them in their MLS. Any seller who would let a listing agent do this risks not getting fair market value while the agent risks advertising an unrepresented seller who is fair game for prospecting (listing agreements require MLS entry).

Sound like a mess? It is. Is it necessary? No. Nearly 90 percent of homebuyers use an agent (a percentage that continues to rise) and most agents do not use Zillow, they use the MLS. Why? It’s reliable. Don’t just take our word for it; ask the real appraisers who rely on the MLS to establish loan values for lenders when you go to buy a home. Think they rely on Zillow? Not!

As noted in the May 30 issue of AppraisalNews, an appraisal industry newsletter, “Ouija boards, tarot cards and…Zestimates. Enjoy them for what they are. When making a serious medical decision, you seek out a licensed, experienced doctor; when making an important decision regarding one of your biggest assets (your house), there is no substitute to using a licensed, experienced professional appraiser.”