Federal Judge Dismisses Lawsuit Accusing Zillow of Conducting Appraisal Without License

This is a follow up to my post last week about some of the controversies surrounding the real estate website Zillow.  To bring yourself up to speed, click here

Welcome back to the post!  At the time of publication a lawsuit was pending against Zillow accusing the website of violating Illinois law by conducting appraisals without a license.  The Plaintiff in the lawsuit sought an injunction stopping Zillow from publishing its Zestimates in Illinois, as well as unspecified compensatory and punitive damages.

In what could be called a big win for Zillow, Judge Amy St. Eve held today that Zillow is not violating Illinois law, because Zestimates fall into an exception in the Illinois Real Estate Appraiser Licensing Act (the Act).  The exception provides that non-licensees may “procure an automated valuation model” from publicly available data without obtaining an appraisal license.  Judge St. Eve found that development of Zestimates by Zillow are clearly the procurement of an automated valuation model.  As such, Zillow does not need to be licensed.

The Court’s holding is significant, there was a substantive determination that Zillow is not breaking the law.  Had the Court simply based its holding on a technicality, it would leave the door open for further attack.  As such, the ruling provides a significant precedent for Zillow to rely upon should it be sued again, or if the State of Illinois were to bring an action against Zillow to enforce the Act.

So, it looks like Zillow is, in fact, here to stay.  Moreover, Zillow continues to expand its offerings with its “Instant Offers” pilot program.  (Hat tip to Cleo Aquino of Superior Realty for the heads up on this.)  The program launched in May 2017 in the Las Vegas and Orlando markets and allows sellers to make their property available for cash offers from 15 select large private investors with closing in as little as one week.  The program will expand to Phoenix next month.  Whether Zillow will see success with the program is anyone’s guess (it looks a bit predatory to me, to be honest…), but it certainly looks like Zillow is looking to take a more active role in the market.

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

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