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Court Dismisses Action Against Zillow for its Zestimates

(August 24, 2017) A lawsuit to enjoin from publishing “Zestimates” on home values has been dismissed because the price estimate is not an official appraisal, does not invade the homeowner’s privacy rights, and is not deceptive.

The plaintiffs filed a class action against Zillow, Inc. after the company’s “Zestimates” reported values that plaintiffs believed were far under the actual value of the homes, making their homes harder to sell above the online estimate.

The complaint alleged that publishing estimates of home values on Zillow’s website violated Illinois law because Zillow is not a licensed appraiser. The lawsuit also contended that the estimates intruded upon the plaintiffs’ seclusion because it contained information on the home’s size and tax information and were deceptive.

Illinois law makes it illegal to develop a real estate appraisal of a property’s value without a license. However, the law does not apply “to the procurement of an automated valuation model.” The trial court found the law “unambiguously exempts the procurement of Automated Valuation Models without limitation” and therefore exempts Zillow because its estimates are automatically computed daily based on public and user-submitted data. Moreover, even if the law applied, the court found that the Illinois law did not allow for a private cause of action, thus barring plaintiffs’ request for an injunction.

As to the claim for intrusion upon seclusion, the court noted, “Zillow’s Zestimates are based on public and user-submitted information, not private information.” An “alleged intrusion based on learning information about Plaintiffs’ property is not highly offensive or objectionable,” the court said.

Finally, the court said the Zestimates “are not false, misleading, or likely to confuse. The word ‘Zestimate’—an obvious portmanteau of ‘Zillow’ and ‘estimate’—itself indicates that Zestimates are merely an estimate of the market value of a property.” The court found in viewing Zillow’s website that the company “discloses clearly and in great detail that Zestimates may not be accurate.” Moreover, the judge found “Zestimates are nonactionable opinions on value.”

Patel v. Zillow, Inc., N.D. Illinois No. 17CV4008, filed August 23, 2017.