Home-valuation site said to mislead consumers

Since the home-valuation website Zillow.com had its well-publicized launch eight months ago, it has taken a lot of flak from its users for being frequently wrong. Now, the Seattle-based site, which allows you to look up the estimated value of your house for free, is accused of purposely being misleading.

In a 12-page complaint filed with the Federal Trade Commission last week, a leading fair housing advocacy group says Zillow.com’s “misinformation” about home values is helping predatory lenders, real estate professionals and others take advantage of unwitting consumers.

The website “is increasingly being used to convince borrowers that a property is worth a certain, inaccurate amount,” said John Taylor, president of the National Community Reinvestment Coalition, a Washington, D.C.-based nonprofit organization that works to get credit and capital flowing into traditionally underserved communities.

“Zillow has a responsibility that the data used by the public is data that is accurate and not used in a way that impacts the well-being of the consumer,” Taylor said.

Zillow disputed the accusations and called the 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 homes,” the company said in a statement.

Zillow.com has collected more than $50 million in venture capital and makes money from advertisements placed on its site.

Taylor said his group has evidence of bad practices stemming from Zillow.com’s automated valuations, but he declined to offer specifics in an interview.

As a “free research tool” for consumers, Zillow.com says it can provide values -- or “zestimates” -- on more than 60 million homes in the U.S., using a mix of property records and automated valuation systems.

The website also has a page-long disclaimer telling users that its valuations are not formal appraisals and that the accuracy rate of its estimates vary by location.

Last month, the company introduced a feature that allowed homeowners to update details about their properties with the goal, in part, of improving the accuracy of the estimates.

The reinvestment coalition said it wanted the FTC to require Zillow.com to carry a better disclaimer. Taylor declined to comment specifically on what an amended disclaimer might say or whether the FTC should take stronger action.

Since the complaint was filed, Zillow.com has begun a dialogue with the coalition, according to the company’s blog.

The FTC wasn’t immediately available for comment.