Zillow.com accused of discrimination in home valuations

WASHINGTON — The Federal Trade Commission said Tuesday it has received a complaint from a Washington-based advocacy group that Zillow.com, an online real estate valuation service, was misrepresenting home prices based on race.

The FTC would not confirm whether it would investigate Seattle-based Zillow following the complaint from the National Community Reinvestment Coalition, which the agency received last week.

In a letter to the FTC, the group said that Zillow undervalues homes in black and Latino neighborhoods because of a higher risk for “discriminatory and predatory lending practices.” The group also says the site has a less than 30 percent accuracy rate.

Claudia Bourne Farrell, an FTC spokeswoman, said: “First, there is a determination made whether to investigate, but investigations are not only based on complaints we receive from organizations like that one.”

Zillow denies the allegations, saying it does not obtain demographic data on its housing data and offers accuracy assessments on a county-by-county basis, according to Zillow spokeswoman Amy Bohutinsky.

The company claims the median margin of error on its home estimates is 7.2 percent and that 62 percent of its estimates fall within 10 percent of the actual sale price of the home.

The Web site, which was launched in February, reminds users in several places on the site that “Zillow is not an appraisal, but a free research tool for consumers.”

Zillow acknowledged that there is more work to be done to “tweak” algorithms used in its accuracy estimates.

TeAnne Chennault, a spokeswoman for the National Community Reinvestment Coalition, said the allegations against Zillow were based on an audit it did of the site’s estimates. It is reviewing that audit to decide whether to file additional complaints with other government agencies.