Real estate website Zillow.com has built a successful business out of telling online visitors how much your house is worth. Now it’s telling the world whether you’re in foreclosure.
The company on Thursday launched a free feature that allows anybody searching for homes to view those that aren’t listed for sale but are headed that way because of financial distress.
Nosy neighbors will be able to see if a homeowner has defaulted on the mortgage and by how much, whether a house has been taken back by the lender, and what a house might sell for in foreclosure, among other things.
While information on borrowers in foreclosure has long been public, it has been accessible only to those willing to dig through public records or pay specialized providers who aggregate that data for a fee. Zillow executives described the new feature as a service for people shopping for homes and a way to provide increased transparency to real estate.
But the move by the real estate website immediately raised concerns among housing advocates and some privacy experts. They argued that making such data easily available could have implications such as embarrassing people already going through hard times.
“What we are confronted with here is a scenario that is becoming increasingly common in today’s world, which is things that were hard to get, but public, are becoming easy to get to, and it changes the dynamics of society,” said Joseph Turow, a University of Pennsylvania professor who is an expert on privacy concerns. “The larger issue that you are pointing to is the democratization of data that is taking place, possibly, without any kind of social discussion around it.”
Zillow titled the new data on homes in foreclosure “pre-market inventory” and said that home shoppers who use the company’s site have been asking for the service.
The company said it would now provide details on 1.8 million homes in the foreclosure process. The information will include more than 1.5 million homes whose borrowers have entered foreclosure but still own their homes as well as about 260,000 bank-owned properties not yet listed for sale. Contact details for real estate agents specializing in foreclosures will be listed, and a foreclosure center on the company’s site also has been launched.
The names of borrowers facing foreclosure will not be listed. Those troubled borrowers won’t be allowed to opt out of having their homes publicly listed, a spokeswoman for Zillow said, though they will be allowed to appeal any information they believe is incorrect.
The benefits of having a more transparent housing marketplace outweigh privacy concerns, Zillow Chief Marketing Officer Amy Bohutinsky said. In addition, many troubled homeowners might welcome the opportunity to attract a broader pool of people interested in buying the home they can no longer afford, she said.
“This helps buyers become smarter about their local market, and it also gives them access to potential inventory that they wouldn’t have been able to find,” Bohutinsky said. “We think the benefits to buyers and the benefits to homeowners who may want their homes exposed to a much broader group of people other than a lot of savvy investors -- we think that is a really big benefit, and that benefit outweighs anything else.”
Bohutinsky noted that when Zillow launched its site six years ago, the concept of being able to look up a home’s transaction history -- what your neighbor paid -- was foreign to many and was controversial. Now that information is readily available through Zillow and competitor sites such as Redfin, Trulia and Realtor.com.
Foreclosure data on homes are already available for a fee from sites such as ForeclosureRadar and Realtytrac.
The move by the site comes as competition for lower-priced homes, particularly in California, has grown so fierce that the number of available properties has dropped dramatically over the last year. In some parts of the Inland Empire and other regions in Southern California, the supply of homes on the market is down to about a month’s worth, real estate agents have said.
That scarcity has increased demand for information about the housing market from consumers.
Karen North, director of the Annenberg Program on Online Communities at the USC Annenberg School for Communication and Journalism, said there should be no surprise that information once available for a fee is now free. Home shoppers have grown increasingly sophisticated in recent years and are out looking for bargains.
“Regular people have become aware of the fact that there are such things as short sales,” she said. “People have discovered that there are ways to buy houses that are under-market.”
The newly available foreclosure information is part of an explosion of increasingly visible data that once was limited in availability.
Instant background checks are now available on smartphones. Political campaigns are using targeted ads aimed at voters depending on where they live, their voting records and even what online sites they frequent. Retail agencies also are employing sophisticated tools of analysis to study consumers’ behavior and market to them based on their buying patterns.
The danger in the current information boom, some experts say, is that laws haven’t kept up.
“Sometimes things are protected not by the law but by the act of having to go look it up,” said Ryan Calo, a professor at the University of Washington School of Law. “Now, in the Internet age, where everything is organized so neatly, and quickly, the question then becomes -- and this is a question people have taken a couple whacks at -- does the law need to respond to changes in technology?”
At the same time, foreclosures have become increasingly regulated and contentious.
This year the nation’s largest banks struck a deal with a consortium of attorneys general and federal agencies to resolve claims of fraud and improprieties in the foreclosure process. The result of that settlement is that many banks are now trying to conduct workouts with borrowers rather than foreclose.
“If I am trying to save my home -- working with my lender on a loan modification, but we haven’t come to a decision yet -- I would be pretty alarmed to see my house on a database of pending foreclosures open to the world,” said Bruce Mirken, a spokesman for the Greenlining Institute. “Even if it didn’t directly affect the negotiations, it could be upsetting to most people.”