By: Sophia Studer

The residential real estate market is historically isolated. Before the creation of public-friendly websites like Zillow, multiple listing services (“MLSs”) held monopolies over real estate data and listings within each particular jurisdiction.[1] Because of this insular framework, if a person was buying a home in a different jurisdiction than she was selling her current home in,  that could potentially necessitate buying access to the foreign jurisdiction’s MLS (if offered) or even hiring an entirely separate real estate agent in the new jurisdiction.[2] Seeing this evident gap in the market, startups like Zillow “have supplemented MLS data with user-friendly interfaces to become indispensable tools for many house-hunting consumers.”[3]

While websites like Zillow can make house hunting more approachable, discrepancies between actual appraisal values and “Zestimates” can leave some sellers feeling burned. The Zestimate is a home valuation device that is calculated through a “proprietary algorithm that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages.”[4] The algorithm also accounts for factors such as square footage, location, unique home features, comparable homes in the area, and the like.[5] Zillow states that “in most major markets, the Zestimate for on-market homes is within 10% of the final sale price [for] more than 95%” of sales.[6] This generally bodes well for sellers who have an accurate or higher-than-appraised-value Zestimate because it allows the Zillow-using consumer to feel as though she is getting a great deal.[7] On the other hand, if the Zestimate is “lower than the list price, the home appears to be overpriced,” and the buyer might feel like she is being swindled.[8]

This exact issue was reviewed by The Court of Appeals for the Seventh Circuit in Patel v. Zillow, Inc. when a homeowner claimed that the Zestimate for his home was too low and that upon learning of the higher selling price, prospective buyers were “scared away.”[9] The Seventh Circuit denied the plaintiff’s plea for the Zestimate to be taken down or changed; one of the reasons being that Zestimates are not “statements of fact . . . [but] . . . opinions, which [under the trade practices act] are not actionable.”[10] The court’s line of reasoning for affirming this decision is that if Zillow were to remove the Zestimates that were below selling price, the data would run the risk of becoming skewed in the other direction.[11] Removing data points that favor buyers or sellers renders the Zestimate even more inaccurate, and does so at no benefit to the real estate market as a whole.[12]

This being said, the imperfections of sites like Zillow pale in comparison to the immense accessibility it grants to laypeople trying to gain access to the real estate market. Zillow and the Zestimate are valuable tools that allow buyers, sellers, and real estate brokers to operate on a semi-level playing field when it comes to freedom of real estate data and listing information.[13] As services of this nature grow, there will inevitably be new challenging legal questions—like the one in Patel—that will alter the way buyers, sellers, and real estate professionals interact with the real estate market.

[1] James S. Bradbury, Revenge of the Realtors: The Procompetitive Case for Consolidating Multiple Listing Services, 90 U. Colo. L. Rev. 267, 298 (2019).

[2] See id.

[3] Id. at 270.

[4] Definition of Zestimate,, (last visited Sep. 25, 2020).

[5] Id.

[6] Id.

[7] John M. Newman, Antitrust in Digital Markets, 72 Vand. L. Rev. 1497, 1537 (2019).

[8] Id.

[9] Patel v. Zillow, Inc., 915 F.3d 446, 447 (7th Cir. 2019).

[10] Id. at 448 (punctuation omitted).

[11] Id. at 448.

[12] Id. at 448-49.

[13] See generally Bradbury, supra note 1, at 285 (discussing how Zillow may eventually render the real estate broker useless if enough information from MLSs is provided for free online).

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