Zillow Zestimates Under Fire
John Cook reports that Zillow has gotten itself into hot water about its home valuations:
The National Community Reinvestment Coalition, a Washington, D.C.-based nonprofit that promotes equal access to credit and capital for underserved communities, has filed a 12-page complaint (PDF) against Zillow with the Federal Trade Commission.
You can read the full complaint here. [PDF]
The crux of their complaint is that Zillow’s valuations are misleading and place the “American dream of homeownership at risk.” According to the NCRC, some real estate and lending professionals have been using Zillow’s Zestimates to defraud consumers.
Zillow, for their part, have not responded publicly to the charge, as far as I can tell. Their Press Room and blog remain quiet on the issue currently. They have however, announced they’ve opened their API to all web sites today.
This is a fairly serious allegation in my opinion, and from a PR perspective, one that they should be fairly aggressive in countering.
Not being any kind of legal expert (heck, I’m a marketer after all), I will defer to others to pass judgement on the merit of this complaint.
UPDATE: Amy from Zillow emailed me with their statement:
We believe these allegations are 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 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.
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5 Comment(s)
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Tony Arko | Oct 26, 2006 | Reply
If I have read Amy’s response correctly, she is saying it is ok to give out extremely inaccurate information as long as it is free and it is at the beginning of your research. That doesn’t seem like a very good response.
Lenny Gurvich | Oct 28, 2006 | Reply
The value of any good or service is what seller and buyer agree to, not what some computer program spits out. Come on NCRC. Who’s behind that BS?
Ron Asteak | Aug 3, 2007 | Reply
Zillow “Guess-Idiots” appear to rely on public tax records that in some cases haven’t been updated in twenty-five years. The zestimator is a sketchy tool to rely on. I believe it’s best to use a Professional Realtor when appraising property.
Mia | Apr 29, 2009 | Reply
My neighbors custom built home just sold for $94,000 over what Zwillow website had estimated the value. Zwillow estimates appeared to compare theirs to depressed area’s located miles from the home while others within walking distance are selling for over a million. I am planning on listing my custom built home and I shudder to think what inaccurate estimate they will give it.
Dan | Sep 28, 2009 | Reply
I just looked at my parents property and according to Zestimate it almost doubled overnight… clearly one of the many glitches in the AVM… I had thought that the inaccuracy happened because of outdated data, but it turns out their data is fairly fresh. Unfortunately, the comps. blew things way out of scale – it’s a very small town with no comps. There should be some stop-gad or red flag when a property changes in value by more than 5% in one day, or 10% in a week… something anyway.