Zillow In Zrouble?


Zillow.com, the fast growing (at least in popularity) real estate appraisal mash-up service based in Seattle, has hit an air pocket. The National Community Reinvestment Coalition (NCRC) is complaining that the “Internet financial services and real estate provider Zillow.com is misleading consumers, real estate professionals and financial service providers in on-line home valuations.” They have filed a complaint with the Federal Trade Commission which at this point is just a complaint, not an investigation. (Zillow president, Lloyd Frink gives his side of the story on the Zillow blog.)
The specific charges are:

  1. Zillow is falsely representing to the public that its on-line valuations are within ten percent of the home
    selling price.
  2. Zillow has a less than 30 % accuracy rate when offering the valuations for public consumption.
  3. Zillow.com’s over and under valuations are causing substantial injury to consumers nationwide when they consider selling their home, using their home equity or buying or refinancing property.

I think the crux of the problem is this point from the complaint.

NCRC further contends that the general public is unaware that AVMs are exempt from Uniform Standards of Professional Appraisal Practice (USPAP), and that the “average” consumer who relies upon information on the www.Zillow.com internet site mistakenly believes that he or she is receiving a valuation equivalent to one conducted by a valuation professional.

In other words, a lot of appraisal professionals can get dis intermediated by Zillow and their ilk, and that’s cause many a lot of sleepless nights. The classic old vs. new debate. On the other side of the debate, we are pretty sure the VCs who have pumped in $57 million into the company must be having an unpleasant weekend.

Frink makes a good point when he writes:

We say in many places on the site (and next to the Zestimate on every home details page) that Zillow is not an appraisal, but a free research tool for consumers. We’ve also tried to be really transparent since we launched about Zestimate accuracy.


Don Moery

I just happened on this website by accident and did a bit of quick research to support or debunk the claim that Zillow’s Zestimates were far off the mark. I looked at over a dozen properties in our neighborhood and surrounding areas in San Clemente, CA and Zestimates overall are certainly within a reasonably narrow range of what the properties are actually worth. I know this real estate market as well or better than any so-called real estate professional. They come and go and I have been tracking it for years.

Jim Johnson


Ulistit.com is a cool site that allows sellers to list their house themselves. Taking a little control back from the agents.

donald scotten

Zillow is great. Nothing is perfect in real estate but how can consumers be harmed by having more rather than less information? The real problem is the real estate industry, which has so complicated the property selling process that no one can do anything without hiring “professionals.”


i’ve been buying real eatate using zillow just as a reference, a rough idea, a ballpark. guess what? hud and accomplices are now selling foreclosures right at zillow’s zestimate numbers
is this a coincidence or a guideline?
it seems like, for a reference tool at least, zillow is great.


I like how it’s taken for granted that human appraisals are more impartial and ultimately more accurate. In Seattle it’s been (read past tense) common practice for buyers to get into bidding wars and houses going for 30-50% over asking price–how’s that for accuracy.


Altos Research is approaching this market from the bottom up, gathering very detailed information in local markets. Right now they have detailed info on the Bay Area Markets, Chicago and Seattle, and I assume more to come. I don’t know how Altos gets its info, but it seems accurate. When they scale, they will help solve this problem.



I agree with Elliot. Anything that shakes up the market and brings more fairness is a good thing. Does Zillow need work? Yes. Isn’t it still “beta”?

Elliott C. Back

When you’re started shaking up the established monopolies, you know you’ve got a great idea. Zillow isn’t perfect, but as it gets better, a lot of people in the valuations industry will find their roles threatened.


For anyone who disagress with Zillow’s valuations, put up your numbers and let us decide. And please let us know if you are a buyer or seller.

Kevin Krewell

I tried Zillow quite a while ago and found that the valuations were significantly flawed because it didn’t factor in information about school districts and neighborhoods. Even within a short distance, the house prices can vary by 100’s of thousands based on which school district, the age of the specific development, and being on the “right side of the tracks.” For Zillow to be better, it needed to doa better job of learning those differences and adding more levels of data mining. As a simple mash-up, it’s only a toy, not a tool.


I have to agree that Zillow’s numbers are way, way off. I put my home on the market recently, and the difference between Zillow’s estimate, which has varied wildly in the last 12 months, versus the price determine by our agent after a CMA was enormous. Zillow has been off as much as 160%. It is, at best, a fun toy, and at worst, an incredibly unreliable and misleading benchmark.



You will wake up in 3 months and find that Zillow is “investing” a couple of million dollars into and “educational campaign” with the NCRC that will be “managed by” this same organization.

And then Zillow will an okay company to work with after that. This is what the NCRC always does, they make Jesse Jackson look like an amateur.


We looked at Zillow when we bought a house last year. It was no more helpful than looking at randomly generated numbers. For all I know, that is what they use.

Shuki Haiminis

I think that zillow is a great resource to gather som basic insights ito certain properties. Obviously you can’t take their zestimate as a 100% appraisal but they also state this all over the site.

The NCRC is using this as a leverage tactic.


Zillow may be fun but it has NO VIABLE business model that can make sustainable $$$.

Stupid greedy VC’s looking for a quick flip…I hope you lose your asses on this one !


Zillow is fun but unless they radically improve the technology (if that’s even possible), it will never be a substitute for an actual evaluation.


I think that at this point, Zillow can only be a starting point to see how much homes are worth. It’s even a fun tool to estimate how much your friend’s house is worth. With the given variability of the results, it cannot provide anything too useful. Over time though, as they tweak their formula, I expect them to be very valuable for homeowners/homebuyers. Right now, I would hate to go to the bargaining table and have someone print off some Zillow information.


How many of you have actually tried using the valuations on Zillow for something useful? I checked them out recently while buying a house in Southern California, and they were ridiculously off the real valuations of properties in the area. Furthermore, their “valuation charts” are entirely gimmicky and plain WRONG. I don’t know where they are getting their pseudo-metrics from, but I can see how a less savvy person might think they are actually based on real information, and attempt to use them in a negotiation setting …

That being said, I love Zillow’s plot maps – very very useful for figuring out addresses for properties nearby, which can be checked against lists of recent sales (from sources that seem to have avoided Zillow’s robots thus far).

Om Malik

Amen to that. I think it is the real estate industry spends liberally on local politicians and pretty much get away with everything. anyway lets see how this shakes out.

Kevin Boer

It’s a shakedown, pure and simple. Classic play in the real estate biz — find the deepest pockets, threaten to sue, get them to settle. Last time you bought or sold a home, remember all those disclosures you had to sign — like the California Red Legged Frog Habitat Disclosure and the Errant Golf Ball Disclosure? Those all came about because of a similar shakedown at one point. It’s simply, and unfortunately, the cost of doing business in real estate.

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