KENNETH HARNEY: Web site's property valuations questioned
November 5, 2006
WASHINGTON -- 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 offers "free, instant valuations and data for 67 million-plus homes"?
Zillow was launched with major media fanfare last 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.
But Zillow is coming under harsh scrutiny. In a complaint filed Oct. 25 with the Federal Trade Commission, the National Community Reinvestment Coalition (NCRC) charged that Zillow knowingly deceives the public by presenting its property estimates as accurate, whereas they are frequently far off the mark.
The nonprofit coalition, which is composed of housing and economic justice organizations around the country, says its own audit of Zillow's accuracy documented that its valuations are within 10% 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, according to the complaint.
"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 charged.
That alleged disparity, in turn, has opened the door to a variety of deceptive and predatory real estate practices in those neighborhoods.
In a prepared statement, Zillow called the coalition's complaint "groundless."
"As we say consistently and prominently on our Web site, Zillow is a free research tool for consumers, and Zestimates are designed to be a starting point for consumers who want to learn about the value of houses. We make every effort to explain on our site the role of Zestimates as a research tool, as well as to clearly display our rates of accuracy for every area we cover."
San Diego appraiser Vicky Cassens Zillioux says that "valuing a property for a financial decision is not a game -- and should not be treated lightly by the consumer, lender or the vendor supplying that value." She notes that appraisers are held to high standards of accuracy and legal liability by lenders and regulators, and "a similar level of accuracy should be expected by the consumer at Zillow.com."
November 5, 2006
WASHINGTON -- 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 offers "free, instant valuations and data for 67 million-plus homes"?
Zillow was launched with major media fanfare last 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.
But Zillow is coming under harsh scrutiny. In a complaint filed Oct. 25 with the Federal Trade Commission, the National Community Reinvestment Coalition (NCRC) charged that Zillow knowingly deceives the public by presenting its property estimates as accurate, whereas they are frequently far off the mark.
The nonprofit coalition, which is composed of housing and economic justice organizations around the country, says its own audit of Zillow's accuracy documented that its valuations are within 10% 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, according to the complaint.
"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 charged.
That alleged disparity, in turn, has opened the door to a variety of deceptive and predatory real estate practices in those neighborhoods.
In a prepared statement, Zillow called the coalition's complaint "groundless."
"As we say consistently and prominently on our Web site, Zillow is a free research tool for consumers, and Zestimates are designed to be a starting point for consumers who want to learn about the value of houses. We make every effort to explain on our site the role of Zestimates as a research tool, as well as to clearly display our rates of accuracy for every area we cover."
San Diego appraiser Vicky Cassens Zillioux says that "valuing a property for a financial decision is not a game -- and should not be treated lightly by the consumer, lender or the vendor supplying that value." She notes that appraisers are held to high standards of accuracy and legal liability by lenders and regulators, and "a similar level of accuracy should be expected by the consumer at Zillow.com."
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