On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Friday, January 19, 2018.
Is Zillow unfairly letting some of its partner brokers drop the “Zestimate” values of certain pieces of real estate in order to scare buyers away from the competition?
A New Jersey group thinks so. It’s suing Zillow for what is essentially a violation of anti-trust laws and unfair competition.
Zillow’s brand is reliant on its marketing itself as a transparent tool that any buyer or seller can use to get a somewhat realistic value of a property. It does, however, offer the disclaimer that its prices aren’t necessarily accurate. Yet, buyers who are looking for houses often see the Zestimate immediately below a home’s list price.
When the discrepancy is small, that might not be any big deal. When the discrepancy is thousands — or even millions — of dollars apart, that is likely to make buyers run the other direction.
Which is exactly what the New Jersey group says happened when it listed a mansion overlooking a cliff at around $7.8 million. Zillow valued it at less than $4 million instead.
Zillow was the first website to give consumers the ability to see real estate values for themselves, granting easy access to things like recent sales in a neighborhood and current listings. However, the Zestimate algorithm that computes a home’s value can be easily skewed — and there are real estate professionals who believe that Zillow is a nightmare to their trade.
If a real estate broker is a Zillow partner, he or she can move the Zestimate or alter it if it reads too low. Nonpartner brokers don’t have that option. That’s the basis for the unfair competition suit because Zillow allows those who partner with the company a competitive edge with consumers who take the site’s property value estimations as gospel.
While it remains to be seen how this suit will turn out, so far Zillow has weathered previous claims of unfair play because it has always been clear that it is only one data point out of a whole consumers should consider.
Perhaps the best lesson that can be taken from the whole thing is that there’s simply no replacement — for now — for professional real estate advice.
Source: GeekWire, “Zillow sued over how it displays Zestimate home valuation tool in some partner listings,” Nat Levy, Jan. 16, 2018