Though Zillow says that their house price estimates are not official appraisals, buyers treat them as such, a new lawsuit filed by Suburban Chicago home builders says.
MarketWatch reports that the group argues that the Zestimates are lower than what the homes eventually sell for. The inaccurate estimates mislead buyers and anger sellers.
Zillow’s estimates are based on public records. They factor in square footage, number of bedrooms, and other house features and compare it with homes in the vicinity.
In Chicago, a Zestimate comes within 5.9% of the eventual sale price just over 44% of the time. Nationwide, Zillow Zestimates are within 5% of the actual sale price 53.9% of the time, within 10% of the sale price 75.6% of the time and within 20% of the closing price 89.7% of the time, according to the company.