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Zillow.com Accused of Racial Discrimination When Valuing Homes
A recent article reveals that Zillow.com, a website that provides free online valuations of residential properties in the United States, has been accused of undervaluing homes located primarily in low-income or minority-populated neighbourhoods. The National Community Reinvestment Coalition (the “Coalition”), an umbrella group that organizes local communities against financial institutions believed to be using discriminatory practices, argued that the undervaluation of such homes placed its residents at risk of discriminatory and predatory lending practices. For example, a real estate or lending industry professional may use the estimates provided on Zillow.com to improperly appraise the value of a home, thereby causing the homeowner to borrow more money than necessary. Zillow representatives, however, argued that the accuracy of home valuations vary based on the amount of applicable market data available, and that such data does not include demographic information. They further observed that computers are used to calculate the value of homes, and that the resulting estimates are intended for use by consumers, not industry professionals. The Coalition has sent a complaint letter to the U.S. Federal Trade Commission requesting an investigation into the matter and that Zillow.com be stopped from providing home valuations.
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