Back in 2010, Massachusetts bankruptcy court judge Melvin Hoffman went out on a limb and trashed the use of Zillow.com printouts as an improper way to value real estate in a bankruptcy case.
At the time, Hoffman’s opinion in the Darosa case was the only published comment from a bankruptcy judge in the United States concerning the internet property valuation service.
Three years later, in the middle of 2013, there’s starting to be some more acceptance of Zillow as a legitimate means of valuing property.
Without a doubt, the Chicago area is the undisputed capital of using Zillow in bankruptcy court. Five opinions by three separate bankruptcy judges support, in one fashion or another, the use of Zillow printouts to provide property valuations in court. (The cases are Gustab, Vargas, Cambia, Harris and Munoz, decided between July 2012, and February, 2013).
But the most dramatic success in bankruptcy court for the use of a Zillow came in February 2013 from Colorado, where the debtors in the Rozinski case used a Zillow (plus the wife’s own opinion of value) to prevail over a full appraisal with ten allegedly comparable properties analyzed that was prepared by a real estate professional.
But not every bankruptcy judge is guaranteed to be Zillow-friendly. Case in point, in April of 2013, Judge Bruce Markell in Nevada echoed Judge Hoffman’s views that the service was “inherently unreliable.”
And what of further developments in Massachusetts? So far there has been only one other mention of the Zillow service, and that was in a strange case. In the Rosario case, bankruptcy judge Henry J. Boroff found that a Lawrence bankruptcy preparation service was engaged in the unauthorized practice of law — one of those practices being that they had their own clients look up the value of their homes on Zillow for themselves! Doesn’t sound much like “service” to me……
So what is the future of Zillow in bankruptcy court? Time will tell, but the service does seem to be gaining a foothold of respectability among bankruptcy judges in some pockets of the country.
By Doug Beaton