Nonprofit alleges Zillow estimates are inaccurate

A nonprofit has filed a complaint with the FTC against Zillow.com, the real-estate estimate Web site, accusing it of posting inaccurate estimates.

In its complaint with the Federal Trade Commission, the National Community Reinvestment Coalition states that Zillow is "intentionally misleading consumers and real-estate professionals to rely upon the accuracy of its valuation services despite the full knowledge of the company officials that their valuation Automated Valuation Model (AVM) mechanism is highly inaccurate and misleading."

"We believe these allegations are groundless," said Zillow in a statement. "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 homes. 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."

The NCRC, however, said in its complaint Thursday (click for PDF) that despite Zillow's disclaimer that its site is a starting point, thousands of people use the site for mortgage and real-estate transaction information. It contends that because of this, inaccurate estimates from Zillow put lending and credit institutions in a position to defraud people of the true value of their home.

"For a company that represents to consumers that they are the 'Kelley Blue Book of Homes,' this is a very dangerous situation...NCRC and its members are aware of a growing number of real-estate and lending professionals who use the misinformation on Zillow.com to perpetrate fraud in our nation's markets, often by targeting consumers in violation of Federal and State Fair Housing Laws," said John Taylor, NCRC president and CEO, in a statement.

According to Zillow, its accuracy rate has a 7.2 percent median margin of error when compared with actual sales prices; the Seattle-based company states that fact in several places on its site.

"That's pretty good, considering we've never been inside the home, and don't know about a kitchen remodel," said a Zillow representative.

Zillow announced on Thursday that it would open up its application programming interface, or API, and allow consumer Web sites to use its "Zestimates" free of charge. By implementing Zillow's API, real-estate agents could create mashups with Zillow estimates on their own Web sites. In July, Zillow signed a deal with Yahoo, making it the supplier of estimates for Yahoo Real Estate.

[botte777]

nonprofits are stupid in this arena

Just because ppl use it doesn't mean they should rely on it for 100% accuracy. As they said, it's a STARTING POINT.

I looked our house up months ago as well as it today & it's right in line with our property valuation as well as taxes.

Do I use KBB.com for car values? Sure. Do I use that value as the end-all be-all? Hell no.

[Acesh]

Zillow is not even close. When you have a condo unit listed as worth 133K and the one next door to it worth 28K, there is a problem. In fact , on Realtor.com the specific condo units .. the highest listed now is 98K. Then our own home, which is a single family home, they've confused the larger and smaller two stories and went with the lesser value. Aren't we taxed on the square footage of our homes? All properties i mention here are in good shape.. but guess the fact that it's Michigan and some one decided to strip the value of our homes while other states do so much better. If folks use zillow for their comparables, it will be a long long time, if ever that we recover.

[Kris Linna]

For my house, Zillow is waaay off.

6 months ago and today, Zillow doens't even come close to
properly estimating my house. In fact, it shows my next door
neighbor's house as being worth more, when it is on a much
smaller piece of property and their house as fewer square feet.

Zillow doesn't show that we have been continually making
improvements to our house, while our neighbor's house hasn't
seen even a fresh gallon of paint in 20 years.

When we use Zillow to add in the improvements we've made,
which are many, the value of our house goes up by over 40%. Of
course, that value is only visible to me, if YOU look it will still
show the original, pre-improvment value.

Not to mention that local realtors have given us higher estimates
than Zillow does and they don't see the inside of the house
either.

I think Zillow is interesting to play with but that's about all.
Nobody should be using it for actual valuation. Knowing that
the value of our house is grossly underestimated, how can I trust
the values it gives me for other properties.

[wonky27]

huh?

is that true? why wouldn't the updated info you entered into Zillow also update the value of your house that is visible to everyone?