Smart Homeownership Blog

Zillow And Zestimates Facing Question Markets

Seattle Times business reporter Elizabeth Rhodes examined the accuracy of the free online home price appraisal site Zillow and the result is not positive. After all, online appraisal can never replace a realtor's experience in a neighborhood and access to the physical details of a property.

Some 73 percent of recent single-family home sales in the Puget Sound area came within 10 percent of Zillow's valuation, or "Zestimate," according to information posted on its site.

That means 27 percent did not, and Seattle's Zestimates are more accurate than most everywhere else, the company says.

Zestimates and selling prices are within 10 percent of each other less than 60 percent of the time in New York, Houston, Dallas, Detroit, St. Louis, Kansas City, Mo., and Tampa-St. Petersburg, Fla.

The highest accuracy is in the San Francisco area at 76 percent.

Zillow has estimated the values of more than 67 million homes nationwide. It bases its numbers on information contained in public documents, such as county assessor records, but does not make visits to homes and doesn't know what they look like inside.

That's one reason Zillow assigns homes a value range as well as a Zestimate.

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In September, the site began allowing homeowners to update their home's data and correct errors, a move with the potential to make Zestimates more accurate.

A month later, the National Community Reinvestment Coalition, a nonprofit economic-justice organization based in Washington D.C., filed a complaint with the Federal Trade Commission accusing Zillow of "intentionally misleading consumers and real estate professionals" about the accuracy of its valuations.

It asked the FTC for "immediate intervention" because of the likelihood of "substantial injury to consumers."

In a prepared statement, Zillow responded: "We believe these allegations are groundless. 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 FTC hasn't yet responded to the complaint.

"The commission takes these things seriously, and we will review this matter," spokeswoman Claudia Bourne Farrell said.