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Judge dismisses lawsuit that challenged Zillow's home price estimates

A lawsuit aimed at stopping Zillow from estimating home values on the popular website has been dismissed by U.S. District Court Judge Amy St. Eve.

The suit had claimed that Zillow acts like an appraiser because it lists what it calls Zestimates of homes that are for sale in the Chicago area and around the country. Zestimates place a market value on homes that are for sale. The plaintiffs in the suit claimed that those estimates injured them as they tried to sell homes because Zillow gave their properties lower values than the asking price.

For example, plaintiff Vipul Patel claimed in the suit filed in May that his Schaumburg property was on the market for $1.495 million, yet the Zestimate was just $1,068,677.

Glenview attorney Barbara Andersen had argued in the case that the practice of listing values without being a licensed appraiser was fraudulent and that Zillow's estimates confuse people. Representing home seller Patel and three other property owners, she had hoped to have the case declared a class action on behalf of all owners of Chicago real estate listed on Zillow.

Andersen could not be reached for comment after the judge's decision to dismiss the case.

In Illinois, appraisers must be licensed. Zillow, however, had claimed that its website makes it clear that it is not providing appraisals, Rather, Zillow said, the automated system is simply providing an estimate based on property records such as sale prices, home characteristics and home price appreciation in the area. The word Zestimate, itself, conveys that the values are merely estimates, Zillow said.

Zillow noted in court documents that the median error rate of home values is 5.6 percent and 3.6 percent in the Chicago area.

In the court order, St. Eve disagreed that the Zestimates were confusing and accepted Zillow's argument that they are a starting point in determining a home's value.

gmarksjarvis@chicagotribune.com

Twitter @gailmarksjarvis

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