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An Appraiser's Take on the Zillow Controversy

Posted by: Peter Coy on November 1, 2006

Maybe you heard that a coalition of community activist groups is accusing of misvaluing homes in black and Latino neighborhoods. It’s asking the Federal Trade Commission to investigate. Zillow denies the charges.

The New York Times carried a story Oct. 31 saying that National Community Reinvestment Coalition accused Zillow of systematically undervaluing homes, but in fact the coalition accused Zillow in its press release of both “over and under valuations.” I guess mistakes in both directions can be problems in low-income neighborhoods, depending on the circumstances.

Here’s what a New York City appraiser, Jonathan Miller, has to say about the controversy on his blog.

… And here’s what Zillow itself has to say on its blog.

Reader Comments

Andrew Howe

November 28, 2006 6:46 PM

My experience with Zillow is with my infill waterfront properties. The homes that I have checked do not seem to be able to pluck out a waterfront home in an area that is mixed with waterfront and non-waterfront, making the info of little value in those situations. Its fun to play with, but I have a hard time seeing much decision making being made using it (for me anyway.

Ronald Asteak

January 15, 2007 7:00 PM

Zillow does not take into account the added value of waterfront property. It appears 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.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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