Released: November 04, 2006

Appraising online appraisal site Zillow

Source: Kenneth R. Harney, Washington Post (Free Registration)

Have you ever checked out the satellite photos and market-value estimates of homes in your neighborhood on Zillow.com, the Internet real estate site that says it offers “free, instant valuations and data for 67 million-plus homes?”

Zillow was launched with major media fanfare in February, backed with a reported $57 million in venture capital. It is one of the most popular real estate sites on the Web, visited millions of times a month by sellers, buyers, agents, lenders and homeowners. It also has begun distributing its free Zestimates through Yahoo.com and real estate brokerage sites.

But now Zillow is coming under harsh scrutiny. In a complaint filed Oct. 26 with the Federal Trade Commission, the National Community Reinvestment Coalition said Zillow knowingly deceives the public by presenting its property estimates as accurate, whereas they are frequently far off the mark.

The nonprofit coalition, made up of housing and economic justice organizations around the country, says its audit of Zillow’s accuracy documented that its valuations are within 10 percent of actual market value “less than one-third of the time.”

The allegedly erroneous estimates are especially harmful in low- and moderate-income and minority neighborhoods, the complaint said.

“While overvaluations were prevalent in predominantly white areas, undervaluations were more frequent in communities that were predominantly African-American or Latino by census tract,” the complaint said.

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