Zillow "Zestimate" in Trouble?

Although they say, "Any press is good press," Zillow hasn't received "good press" as of late. Back in May, a class action lawsuit was filed against Zillow.

The claim alleges that Zillow's Zestimate system, their platform for providing home valuation estimates, is inaccurate. If the inaccuracy is proven in court, damages can be award to the plaintiffs on the grounds that this inaccuracy hurt their bargaining position, and in some cases, sales price, during home closings.

In response to these claims, the Chicago Tribune writes, "Zillow has stressed that its Zestimates should be used as a starting point for what a property is worth." So instead of home sellers and home buyers basing their actual pricing on a Zestimate, they should merely factor it into play, along with other variables affecting a home's valuation, such as recent improvements.

But a more long-term solution may be available.

The Motley Fool writes, "The company is looking to crowdsource an improvement to the accuracy of its "Zestimates" just weeks after a class action lawsuit was filed over the flaws in its proprietary algorithms."

By doing so, this would be the first time Zillow is releasing a portion of its proprietary data available to non-Zillow employees. While this obviously can be risky, the one million dollar payout would be rather difficult to turn down.

For more information on Chicagoland real estate closings, contact Michna Law Group by phone at 847.446.4600 or by email at BJM@MichnaLaw.com.

The Illinois Budget Crisis Continues...

Throughout his term, Illinois Governor Bruce Rauner has continually emphasized the high property taxes assessed to Illinois residents. Yesterday (May 31st, 2017), the Illinois State Senate passed a measure to enact a two-year cap on property taxes.

While initially, this sounds like a pro, the Illinois House of Representatives still needs to vote on the issue at hand. Currently, it's unlikely that the House passes the budget with the property tax freeze intact. But Crain's Chicago Business states that "The freeze is like that old Mary Poppins song, "A Spoonful of Sugar." It helps the medicine go down, although definitely not in a "most delightful way." There are undoubtedly other issues which could help make a tax hike more palatable, but we're stuck with this one because the governor is so adamant about a win on this topic."

The eponymous "sugar" is to counteract an increase on Illinois income taxes. To elaborate, the Chicago Tribune illustrates that "House Democrats are united in their opposition to making the income tax hike retroactive to Jan. 1 of this year as the Senate called for. If lawmakers approved a higher rate starting at the first of the year, Illinoisans would have more money withheld from their paychecks to cover income from the first several months of 2017. The biggest question that remains, however, is what kind of tax proposal House Democrats could get behind, and whether they would be willing to pass it without Republican support."

However, Illinois is in a Catch-22. Illinois heavily relies on taxes for funding and education funding has been cut through budget mismanagement. Critics have claimed that the Illinois property tax freeze is an answer to the increase in income taxes, which itself is an answer to underfunding for education.

The Chicago Sun-Times writes, "Yet of all the money actually spent on public education in Illinois, this state contributes only 26 percent. Since state lawmakers have deliberately failed to adequately fund education, as directed by the Constitution, property taxpayers must pick up 67 percent of the cost."

Will Illinois resolve the two-plus-year-long budget crisis? Time will tell.

For additional information on real estate law, please contact Michna Law Group by phone at 847.446.4600 or by email at BJM@MichnaLaw.com.