According to the Arizona Board of Appraisal, Zillow.com will need an appraiser license for offering its zestimates in Arizona. "It's the board's feeling that (Zillow) is providing an appraisal," said Deborah Pearson, Arizona's Board of Appraisal Executive Director.
It would seem a simple matter for Zillow to hire a licensed Arizona appraiser to overzee the Arizona zestimates, but it might also set a dangerous precedent for them. If they concede to Arizona, the door might open to all other states.
It is a minefield for Zillow, and their response is a cautious one. Amy Bohutinsky, Zillow's Director of Communications, said, "We have responded to the letters from the Arizona Board of Appraisal and hope to engage in a productive dialogue with them."
This isn't the first time Zillow has drawn legal fire. Last October the National Community Reinvestment Coalition submitted a complaint to the Federal Trade Commission alleging that Zillow was providing misleading information to consumers with its zestimates.
Thanks to The Arizona Republic for the story.
What scares me is how so many people use the internet for facts actually believe everything they read there is true. Gathering facts this way is like getting all your news in the check out lane at the grocery store. We all know The National Enquirer is a valid resource.
kk
Elaine, Amy, Jon: I'll bet Zillow treads very carefully here--and defends itself vigorously. This is an issue that affects us all.
Kristal: As with any information, consider the source. That is difficult with the internet, though.
Rich et al: Regulation of the internet is a difficult issue and one that gets and deserves lots of consideration. That, too, affects us all.
While it's really easy to judge Zillow's Zestimates, how many times does the real estate community overprice a house (to get a listing)- with no legal ramifications. Please understand, I am not underestimating the importance of a public entity and resource such as Zillow to maintain accurate figures- but it's sort of odd that we demand regulation for them, when on a consistent basis, the real estate community overprices, with the intention of forcing a price drop. Just a thought.
This is interesting. While I am no fan of Zillow and I find the "zestimates" to often be way off-base as far as realistic values in my area, I wonder if requiring them to have an appraisal license will work. Are they providing appraisals? I don't think so. Not full appraisals, anyway. But I do see how what they provide could be considered automated appraisals or desktop appraisals. Hmmm...I think I just changed my mind while writing this comment.
This is something I will want to watch. Thanks for bringing it to our attention.
Wouldn't it be relatively inexpensive for Zillow to associate themselves with at least one licensed appraiser in each state? Each state would have separate licensing requurements to satisfy I guess.
Interesting topic. I had not read about that anywhere else so again at least for me Roberta has scooped a Zillow story.
MM - Interesting thought and one that some of the internet auction companies have implimented. If it works the same way in the appraisal industry, however, the appraiser will be responsible for reviewing the information distributed to the public and then have potential liability for the information he supposedly reviewed. I can see a huge insurance issue here and gigantic personal liability for the individual. Even if Zillow is willing to provide hold harmless agreements for the guy and be willing to cover all of the lawsuits, what happens if Zillow folds, goes bankrupt, etc. Remeber 6 years ago when all the rage was to be on the Board of Directors for or work at an internet company?? People lost their shirts.
This is not as easy to get around as it might sound.
Hi Roberta, it's David from Zillow,
We do hope to clear up this confusion. To quote Zillow's President, Lloyd Frink; “We strongly believe that providing Zestimates in Arizona is completely legal (and in fact an important public service), given that Zestimates are the result of our ‘automated valuation model’ and are not a formal appraisal. The Arizona Board of Appraisals relies on USPAP, the national professional standards for appraisers, and USPAP Advisory Opinion to determine propriety of activities. Here is the relevant opinion on this matter (Advisory Opinion 18): http://commerce.appraisalfoundation.org/html/2006%20USPAP/ao18.htm As you can see, it reads: ‘The output of an AVM is not, by itself, an appraisal.’”
Two Arizona Realtors have weighed in on this story also;
Jay Thompson, The Phoenix Real Estate Guy
Greg Swann, Bloodhound Blog
I'll be back with an update when there's more news.
Interesting Roberta.
I think they should have to be accountable for what they print (disclosures or not) just like everyone else. I personally think "zestimates" are a crock and should be outlawed. My .02 : ) Good post.
I for one am glad someone is saying something about this. I know Zillow is trying to cater to both the consumer and the real estate community to keep the heat off of their internet advertising platform, but to say that Zillow provides an "important public service" is stretching it a bit. There are no "zestimates" on my street, so as a member of the consuming public I really feel left out.
David - by referencing the above mentioned Advisory Opinion are you indicating that you are an appraiser, since this opinion was clearly written to appraisers and used by appraisers in performing their duties? Just asking?
very interesting... and what a quandry it puts them in for sure.
Please keep us posted.
Me
I think they should do something with Zillow. My father-in-law's house was off quite a bit and mine is off about $110,000 from the REAL appraisal I just had done.
Keep us posted and maybe Illinois will join Arizona!!!
Hi Roberta - thanks for sharing this info in your post. I think this will be interesting to follow - both in the 'appraisal' arena as well as potentially in the 'brokerage' business. Providing pricing information may be interpreted by some states as a form of brokerage and in some states as providing appraisal information. Perhaps the time to be held accountable for what they're providing, or attempting to provide, is near.
Ann
Roberta,
thanks for the great info! It's about time something was done about Zillow's off-base "zestimates." It can make it really hard to deal with sellers (or buyers, depending on which way the estimate is off!) when they've got an erroneous, pre-conceived idea of the proerty's value!
I'm glad you picked this subject, I to have found inaccurate information and if I am out there promoting myself and giving the consumer information regarding square footage, house value and so forth then it should also be accurate to a degree. I have accountability to my clients and customers and so should they. In North Carolina (Charlotte Area) they hold us accountable if square footage is off and that is from our local Realtor Association Board. There is enough muck for us to wade through, I just don't need more.
Good Job Roberta.
Roberta, it is no secret that I am not a fan of Zillow. I started posting my listings on Zillow nearly 4 months ago. Since that time I have mande no sales from it and only one visitor has linked to my site from Zillow...me!
Thier home valuation system is a joke. Homes are appreciating 3-10% in Seattle depending on area and depreciating the same amount in Detriot, depending on the area. This are only two cities...what about the rest of the nation? There is no way Zillow can give accurate and reliable information. If homeowners want accurate information on the value of thier home all they have to do is call a good Realtor!
It comes down to the adequacy of the disclaimer used by zillow. Zillow should clearly advise consumers that the zestimate is not an appraisal, in a legally acceptable manner---fine print won't do, hidden language either--it should be PROMINENT.
Zillow's Home Page Disclaimer: Here's what zillow says if you click this link on the home page : "about Zestimate..value and accuracy"
What's a Zestimate?
A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal.
For the disclaimer on the individual house zestimate, you must click 2 links: First this one: "See more zestimate info" then click this: "What's this?"
Neither Zillow disclaimer is in large type, bold or expressed as some states require for CMA, which is as follows:
“the analysis was not done in accordance with uniform standards of accepted professional appraisal practice“.
Are Zillow's disclaimers legally sufficient? Maybe not. Here's what agents face with CMA in some states: "Prominent" disclaimer on the "first page", (in NJ in the largest type used in the report) .
http://tinyurl.com/3ypt8z
Roberta - Thanks for bringing this to our attention, although I must say I am not surprised and fully expect other states to follow suit. Will it hold up in court? Not sure.
Jeff
Hmmmm, giving estimates to value? Putting those estimates in writing? Selling these estimates to Lenders in the form of BPO (Broker Price Opinions) All without a license????
Hmm? I wonder when they'll be issuing a cease and desist order to the real estate community?
R.B."Bob" Mitchell
ValueList Real Estate Services, Inc.
Roberta.... sorry late to the party..... I didn't read any of the comments yet, because I want to go to bed... but I hope this does catch on with other states, because I think it is a problem. Zillow isn't consistent with their values. Some say they have, but I would have to disagree... I have tried it out in my locally area more than once. My parents house, off by $250,000... wow...
This is a fantastic response in Arizona. As I stated earlier, Zillow provides a great service allowing both Owner and Agent listings to be posted in one spot. I have always thought they are way out of their league when it comes to this Zestimate. If they can come up with an automated mathematical system with a low margin of error . . . great! They made a great discovery. The problem they have not realized is that until there is one National MLS system, you will never have an automated system that would be even remotely accurate. But to put out a service and openly admit it is way off is not a service at all to anyone. But that's a huge part of their marketing and draw to the site with a description of the accuracy that most people are not reading is ridiculous.
I haven't ever seen this company as a threat. I feel for the homeowners taking stock in such information because it is costing them money, time, and lots of frustration. I hope they continue to grow the listing service for owners and agents, but that should be their focus and stay out of the pricing game.
Thanks for the post.
The Appraisal Foundation was authorized by Congress as the source of Appraisal Standards. The Appraisal Standards Board established the rules for developing and reporting appraisals and enforces the Uniform Standards of Professional Appraisal Practice(USPAP) which applies to appraisers and appraisal disciplines, and is also used by state and federal regulatory agencies across the US. Appraisal Disciplines include the preparation and reporting of an appraisal, which is defined as "an estimate of value or the probable monetary value of a specific property on the open market".
David G from Zillow is correct - "an AVM output is not, by itself, an appraisal". However, the "AVM Output" that Zillow (and other on-line AVM or CMA sites) provides DOES include an estimate of value and/or value range, therefore, by definition, is an appraisal with the source falling into appraisal disciplines.
In regards to a CMA(Comparative Market Analysis), USPAP defines a CMAas an appraisal. However, a CMA is not considered an appraisal if prepared by a Licensed Realtor or LicensedMortgage Professional. Therefore, they are not bound by USPAP Standards and Standards Rules nor are they required to obtain an appraisal license.
Greg Swann's post calling this Rotarian Socialism is correct.
Appraisers are hired by lenders. The Zestimate is what it's name implies; an estimate branded by a company with a Z. What's next ? Abolish reporting of median prices (that can be manipulated) by the newspapers?
Consumers defer to Realtors for pricing expertise 85% of the time. The other 15% of the time they sell to a friend or family member. Consumers are smart. They know the Zestimate is what it is. They know appraisals don't represent an absolute market value; they are an opinion, too.
I wish I could compile data that showed how far off real market value a URAR can be. The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser.
Arizona's Board of Appraisal is attempting to employ "Rotarian Socialism".
Brian wrote "The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser."
Here is an excerpt from a previous post of mine:
To analyze all the factors and information necessary to determine a value(not value range), the appraiser needs the abilities of an economist, city planner, surveyor, r/e developer, builder, and broker along with knowledge of concepts, legal rights and interests, property ownership, market analysis, value principles, financing, valuation approaches, construction costs, capitalization techniques, statistics, depreciation, topography, reproduction and replacement costs, and value principles, just to name a few, for any of the various types of appraisal assignments requested. Bottom line there is a lot more to determining value than pulling sold and active listings in an area and slapping three letters (CMA or AVM) on a printout to present to a property owner.
Lenders hire appraisers to determine value as an outside third party without monetary interest in the outcome of the transaction, rather than a Realtor whose opinion and commission is based on the outcome.
David, I agree with you that an appraisal is a lot more scientific that either a CMA, but I feel that it's still not an exact science. Don't take this wrong, but sometimes appraisers can't see the forest but for the trees! I've had appraisers come in low on houses that had multiple contracts on it.
The definition of value, from what I remember from real estate school, is what a ready, willing and otherwise able buyer is willing to pay for the property. It slays me when an appraiser cops an attitude about the value that they came in at when the house sold in two days with multiple offers....
I've also had two separate appraisers come in over $100,000 apart on value on the same house. Obviously not an exact science!
R.B. "Bob" Mitchell
ValueList Real Estate Services, Inc.
Roberta
I had no intention and still don't of hijacking your post. I noticed my original blog on this topic was posted about the same time you posted yours. However, yours was a featured one when posted where my wasn't and you received more responses which I find interesting reading.
R.B. "Bob"
I agree, nothing is an exact science. The word value itself can and does have many interpretations and defined in different ways such as: assessed value, market value, book value, value in use, insurable value, appraised value, investment value, replacement value, leased fee value, leasehold value, and the list can go on and does.
To appraise something means to estimate the dollar amount that represents one of its values. The term "market value" is widely used in all fields of the industry as a common reference for any one of the many types of values sought. A common definition of "market value" is as you say, "what a ready, willing and otherwise able buyer is willing to pay for the property". Lenders are more likely looking for "market value" for mortgage loan purposes with its definition being "the most probable price which a property should bring in a competitive and open market under all conditions, requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus" which is the one USPAP requires appraisers to use. Even definitions and interpretations are not an exact science and vary depending on individual needs.
(Responses are in no particular order. It is a random Sunday night:-)
David Hintz: I have been working all weekend and thank you profusely for your expert responses and commentary! Hijacking? No way!
David G from Zillow: Jay and Greg make excellent points that argue well on your behalf. I watch Zillow with interest and even help support it with some tentative advertising dollars. I am still not sure whether Zillow is Realtor friend, foe or inevitability.
WOW!!! Thank you Angie Vandenburgh, Dan Fabrizio-Garcia, Jacob Morales, Maureen Francis, Rich Kruse, Chris Tesch, George Talabas, Barbara Keefauver, David and Tonya, Grant Howell, Jon Angevine, Ann Cummings, Mitchell Hall, Ryan Monroe, Gena Riede, Laura Warden, Laura Karambelis, Jaclyn Chabot, Craig Schiller, Lucia Brooks, Kelli Fronabarger, Missy Caulk, Jennifer Kirby, Jim Crawford, Dan Cummings, Michael Eisenberg, neighbors Jeff Dowling and Brian Brady, Bob Mitchell, Jeff Belonger, Kathy West, John Novak, Dianne Bell, Tony Marriott.
jfSellsius: 100 percent agreement here. Disclosure and transparency are important for all. Forget the fine print!
rather than a Realtor whose opinion and commission is based on the outcome- from David Hintz
David, that outcome is a closed sale which represents the market value. I don't mean to dissuade the value of an appraiser. I rely on appraisals some 100 times a year. When I'm making an asset based loan, however, I need to know what the expected valuation is for a 90 day sale. Some appraisers just don't take current inventory into account.
I need to know what the expected valuation is for a 90 day sale. Some appraisers just don't take current inventory into account.
Brian: Savvy sellers are also taking this information into account when pricing their properties for sale. Current inventory levels and trends are crucial to the valuation process.
I'm all for sticking it to that Z site; it will be intersting to see how this plays out or if other states will join in. I doubt they'll but them out of business though.
There are other sites that do the same thing as zillow, so I don't understand the frenzy here. "Look, the King has no cloths, but neither does the queen, the prince or most of the general population!!!!"
Check these sites out, they also give price quotes:
http://realestateabc.com/
http://cyberhomes.com/
Hey Roberta,
Thanks for your one and only post on Active Rain!
I do have issues with Zillow and their Zestimates. While they might attempt to disclaim them with fine print, the consumer is still believing the data.
I have a prospect that wanted to buy in a community. His #1 reason not to buy was because Zillow said the prices were way too high. I tried to point out the disclaimer, but he ignored it.
HOWEVER on the flip side, how is what they do any different than what a Realtor does when they pull a CMA and give pricing recommendations for a listing? Most Realtors aren't appraisals, so why are they allowed to go one step further than Zillow and take automated data (from the MLS) and make informal adjustments like an appraiser?
Also what about HouseValues.com ? How are they off the hook? Maybe they don't offer real time prices?
Frank Borges LL0SA- Virginia Broker/ Owner FranklyRealty.com
Blog.FranklyRealty.com Featured in BusinessWeek, CNBC, WSJ etc.
Hi Frank
You said "HOWEVER on the flip side, how is what they do any different than what a Realtor does when they pull a CMA and give pricing recommendations for a listing? Most Realtors aren't appraisals, so why are they allowed to go one step further than Zillow and take automated data (from the MLS) and make informal adjustments like an appraiser?
Also what about HouseValues.com ? How are they off the hook? Maybe they don't offer real time prices?"
Anyone with a Mortgage or Realtor License can produce a CMA or AVM indicating a Value and it is not considered an appraisal by definition. From my understanding, Zillow does not have a mortgage, realtor, or appraisal license, therefore the reports produced indicating a value or value range is by definition an appraisal and are in violation of Federal Regulations governing who can provide appraisals or real estate values. HouseValues.com redirects the request to a Licensed Realtor (in the requestors area) to produce the output.
I am fairly certain that Zillow employees one Real Estate broker in each state in order to be able to conduct real estate.
So now tell me why they can't do what they are doing, yet we can?
Don't get me wrong, I don't like their ever changing "we love realtors" while saying indirectly "we hate/wanna cut out Realtors" business model.
From my understanding, Zillow does not have a mortgage, realtor, or appraisal license, therefore the reports produced indicating a value or value range is by definition an appraisal
Zillow.com is a licensed real estate brokerage in Arizona:
http://159.87.254.2/publicdatabase/DetailEntity.aspx?Id=27181
Is it okay for licensed real estate brokerages to offer opinions of value?
John Wall, Charles Ethridge, Christina Lackey: Zillow will continue to provide fodder for real estate argument and discussion for months and months--or even years. My guess? They will be bought out.
Grant: I have been offering instant online valuations on San Diego Previews for several years through Appraiseahome.com
Frank: You had me rattled for a moment, thinking all my posts (139) had been deleted! I've been around since last August!
Your point about Zillow, though, is well taken and is probably the key criticism many Realtors and homeowners level against Z's Zestimates.
HouseValues has a different valuation proposition: They have agents pay them for the opportunity to do the CMA's--and agents are on the hook (think Tom Sawyer!).
See also: A HouseValues.com Experience
Roberta,
You were the first to post about THIS issue.
Ok regarding HouseValues, agreed.
So now back to Zillow having a license.
Why can't they do this stuff if Realtors CAN.
Is Arizona going to come after Realtors next?
Actually I think it would be a GREAT idea to require appraisers to help with the property valuation BEFORE putting it on the market. But I don't see that happening anytime soon.
Frank
Having appraisers REQUIRED to help in with valuation BEFORE putting on the market will probably never happen, however, anyone can request a PRE-LISTING APPRAISAL to help with determining a listing price.
ok, so i'm really late to this party and can't really debate at this point. but i will stir it up a little with some comments..
Roberta, thanks for posting this. this is JUICY!!!
first off, the whole CMA vs Appraisal debate seems a but moot. saying that a REALTOR(R) would have to hold a license. anyone can estimate what a house worth, from a child to my dog. what the use is for is another story. If you intended to inform a seller, then call it a CMA and that's it. let's see where that statement gets me. :)
jf.sellsius make a great point. the disclaimer should not be fine print. why can they call it an estimate of market fair market value and it not be considered an appraisal? sounds like a lot of running in circles in BS so that will make sense.
Mr Dave H. is on point in his statement. "David G from Zillow is correct - "an AVM output is not, by itself, an appraisal". However, the "AVM Output" that Zillow (and other on-line AVM or CMA sites) provides DOES include an estimate of value and/or value range, therefore, by definition, is an appraisal with the source falling into appraisal disciplines."
the zillow dude, quoted AO-18.. well, sorry ADVISORY OPINIONS are NOT a part of USPAP. Here is what it says at the top of the page on that link, bud. "This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems. " (bolded for emphasis-- they are not appraisal standards).
and anyways, calling it an 'estimate', like mentioned before, it offering an opinion of value. period.
Brian, while i agree with your statement, "The Zestimate is what it's name implies; an estimate branded by a company with a Z. What's next ?" your follwing closing statement does not really make me feel tingly inside.
"I wish I could compile data that showed how far off real market value a URAR can be. The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser. " -all i can say is that your market must be different... i dont see how a real estate professional is going to estimate property better than an apprasier? maybe because, as David mentioned, there are different types of value? i'm trying to understand that one.
I dont know of any ONE REALTOR(R), scratch that only REALTOR(R)'s with appraiser licenses that call and confirm sales for sales concession (aka seller subsidies) can attempt to determine 'market value' (which is a very fluid concept since its based on some perception).
So the REELTOR estimate is based on a closed sales price without the concessions included.
and i gotta ask, how can you compile data to show how far off real market value a URAR can be it the value is a matter of opinion (within a certain range)? it changes from consumer to consumer, investor to investor,, based on what they a WILLING to pay, or what RISK they are willing to take. sorry, can't accept that comment. unless a REELTOR is in an Edward Scissor hands market, the appraisers have the valuation thing cornered.. not the other way around. i dont appreciate being put in a box with an AVM either. way off base..
anyways, who cares, those Zestimate are Z$hit. in my area it pulled a comp that is really someone being added to title and some money exchanged. its not an arms length transaction and that skews the numbers. it may be close or right-on sometimes, but not most of the time.
duck.
thankfully, humans are needed. Does zillow take external factors into account? of course the sales of some comps do, but if your home is on the train tracks and all the sales are not? zillow is clueless to that. in all fairness, they state their definication on their site, but its just a sidestepping show.. trying to create a loophole..
ok, so its part of their disclaimer by laying the rules on what a zestimate is.. but its still an estimate. of what? value. hhmm sounds like an appraisal to me.
if it looks like a duck, walks like a duck, smells like a duck, you can dress it in a zebra suit, but its still a
here is a direct quote "The Zestimate is our estimate of fair market value,"
still looks like a duck to me.
nice try, no cigar.
sorry Brian. but if you need an answer, you should reply to the questions posed to you, Sir.
not just a one liner originating from your end. i presented a comment in response to your bold statement., which surely felt insulting from this point of view.
if you should desire not to answer, clarify or respond, that is your right. but then how could you expect me to answer? i choose to do the same.
i know how this debating works. i will explore your viewpoint and opinion with an open mind.. but it's not to a one sided stance. we share, we explore, we learn. i'm not here to be set up like some sort of fool. this is like sales101
the debate started with this.. "I wish I could compile data that showed how far off real market value a URAR can be. The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser. "
i responded, and i feel that i did so with the respect you deserve, as your experience in this industry is many, many times over than mine. why would i respond again without hearing your perspective first?
The actual absolute best source for true market value would be an actual sale of the subject in an arms length transaction without contingencies where neither the buyer nor seller have a compulsion or unknown outside driving factors influencing the sale.
May the best man win here. I'm out. Peace.
Whoa...
70 comments. It's going to take me some time to catch up. But I will :)
TLW...ROAR!
I have to admit, I'm a little surprised at how many think the AZBoA is doing a good thing here.
I blogged about this last week here.
And I still think it's an idiotic and asinine move by the AZBoA. My emails and phone calls to them have gone unreturned.
One other thing about Zillow and their Zestimates...
Seems a lot of agents fear Zillow.
I *love it* when a potential seller whips out a print out and says, "But Zillow says my home is worth more than you do!"
Gives me the perfect opportunity to demonstrate my expertise in pricing.
Heck, if I can't price a home better than strings of code, I'm in the wrong business....
I'm sorry, Nick. You said:
why would i respond again without hearing your perspective first?
Rich Kruse said it best when he said:
The actual absolute best source for true market value would be an actual sale of the subject in an arms length transaction without contingencies where neither the buyer nor seller have a compulsion or unknown outside driving factors influencing the sale.
I concur; that is my opinion. Absent that data, I'd rely on (in what I consider to be most valuable) a Broker's Price Opinion for quick sale value, next a Form 1004 from a licensed appraiser, then a drive-by 2055 appraisal from a licensed appraiser, then an AVM like the Zestimate.
I didn't mean to skirt over your comment. I didn't intent to ignore your comment.
I would like to hear your opinion on this:
So should licensed real estate brokerages be forbidden from giving opinions of value, Nick?
In essence, that is what the proposed legislation in Arizona attempts to do. Of course, they won't tell you that, they'll just say it's to get Zillow.
Nick, look at the comments on this thread; they are ridiculous. Licensed real estate agents smearing another licensed real estate company for offering pricing opinions. They are exhibiting the very bad behavior they indict.
Nick, you said:
but its still an estimate. of what? value. hhmm sounds like an appraisal to me
Is a CMA or a BPO an appraisal? Licensed broker's estimate value everyday.
You said: if it looks like a duck, walks like a duck, smells like a duck, you can dress it in a zebra suit, but its still a duck.
I admit, Nick...it's a duck !
A zestimate is an opinion of value. The AZ legislation will prohibit licensed real estate brokerages from offering their opinion of value. Is that a good thing? I'm okay with it if appraisers are the sole source of opinions of value. We won't need Realtors then; we'll rely on the opinion of value as submitted by the state-sanctioned appraiser
This is my opinnion and I could be wrong, guys.
Peace.
R
Hey Brian.
ok, so i'll play for a while, and then we'll see where it goes and if i get some reciprocation. maybe this comment will clear things up a little.
i agree, the string of comments is a mess. a lot of cross talk and opinions. which is good in the sense that people are expressing their thoughts, even if some of the players are standing way out in left field, or on the bleacher, or outside in the parking lot.
I agree with the comment Rick said. it seems very accurate to me and i like how you accurately stated, "absent that data". Becuase if your valuating something, you most likely don't have the luxury of having an exact comp with same location, condition, etc unless, again, you live in Edward Scissorhand neighborhood.. i.e. cookie cutter-ville.
Buy the listed order of preference i can't entirely agree with. I can't say that a broker price opinion would come before a 1004, as the BPO is a condensed version of a 1004. a little bit of the first page regarding the market conditions, trends, price ranges, etc.. and then a grid, all on one page. in essence the 1004 is more accurate, IMO, because it also lists a few things a BPO doesn't.
so that is my reason for a 1004 over a BPO anyday of the week. obviously if time is an issue, then a BPO will give you a good idea, but i would not go as far as to say it's more accurate (and there was never a time crunch issue in this thread).
my stance is,.. more relevant data = more accurate appraisal., er uh estimate of value.
-now onto the matter at hand, the matter to which i personally take offense to.. and sorry to keep quoting you, cause i know that can be irritating, but..
"The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser. " --note-- real estate professional, which indicates a Broker or a REALTOR(R) to me.
so the question posed, to me, afterwards is worded as "licensed real estate brokerages", which is not the same thing to me. i understand the latter is more in line with the topic of the post.. but my comment was initially due to the former, a "real estate professional" is "the absolute best source for true market value".
I seriously doubt, and i may be wrong, that a brokerage is calling other REALTOR(R) on comps for subsidiaries/concessions, which IMO skews the TRUE value of any home's value. (note we both said 'true')
i say this for obvious ego issues involved once a person has reached the point they have their own brokerage. it can happen, they may call, but highly unlikely.
"So should licensed real estate brokerages be forbidden from giving opinions of value, Nick?" -no. they are very capable of esimating a value at that point in their career. but better than an appraiser? not sure about that.
now your turn..
"The absolute best source for true market value is a neighborhood real estate professional. Not an AVM, nor an appraiser. " why do you think this? as an appraiser i take offense because this is what i do, whereas it's only one thing a real estate professional does. i like to think that i do one thing better than just one thing some one else does. i'm sure a mortgage broker who does it all day long, would agree that the guy that works it as a second job is not as good. i hope he/she would agree, at least.
is my ego in the way? or do i have the right to feel my toes have been stepped on? (i prefer the answer to the other question, this last one is rhetorical.)
I've been following this on Bloodhoundblog, where the prevailing opinion is that the silliness of the AzBofA has made it - and, by extension, the real estate industry - look like its composed of the venal protectionist luddites that the public already assumes it is, much more interested in what enters their back pockets than the access by millions to a popular and harmless website. What it says to the consumer - that would be our customers - is: You're too stupid to see this.
Customers really don't like that.
Zillow is. This c&d is going exactly nowhere, and shouldn't. We're in a changing industry, and we need to embrace and use the changes to advantage. Good ideas will thrive, bad ideas will die of their own inertia.
Trying to legislate ideas out of existence for protection simply doesn't work. Ask the music industry...
Your ego isn't in the way, Nick. Don't be offended; it's just my opinion for the type of lending I do.
Why do I prefer a BPO to a 1004? My expertise in lending relies on liquidation value; I look for the price for a 90 day close. A 1004 relies in historical data that may go back 6 months (and the report itself can be 6 months old). So, a sale from July, 2006 won't be reflective of the current liquidation value in April, 2007.
Again, it's my opinion. I rely on local real estate brokers as experts for property value, which, as I've stated, is the what Rich defines as the sale value in an arms length transaction.
When I'm brokering a loan, I rely on whatever the ultimate lender wants for a valuation report. When I'm brokering a HELOC. I BANK on the AVM because I know it's going to be more generous.
Now, I'll look at comps and say "this house will sell for $685,000" in 90 days. I'll order a BPO to back it up if I'm nervous. I'll order a 1004 if I'm more nervous. So what's that tell you? (It means that I DO value the appraisal report as a supporting opinion)
Nick,
I appreciate the discussion. We are debating minor points. The real issue is that the appraiser's in Arizona are trying to outlaw a certain real estate brokerage's price opinions; that's protectionist. The piling on Zillow in this thread by other real estate brokers is, well...astounding to me.
Zillow is a poorly refined AVM. AVMs are run by state licensed mortgage banking and real estate companies all the time. They are used to confirm, probe and asses value. Many AVM products that are used privately by these companies are no better than the Zestimate. Making AVM information available to the public should not require an appraisal license as an AVM is not defined as an appraisal.
Should Zillow work on improving their AVM? Absolutely. Should the Arizona Appraisal Board focus on what they provide (which is infinitely better than the Zestimate) rather than dwell on requiring a free, inaccurate AVM product to redefine the automated valuation and lending industries? Absolutely.
Making Zillow obatin an appraiser license for its AVM will take many of the most important risk modeling tools out of lenders' hands when making the decision to lend on a property.
Disliking Zillow for giving out bad information is one thing; disliking Zillow for giving out free information is completely different. I wrote more about it in my post on my blog: http://www.blownmortgage.com/blownmortgage_blog/2007/04/when_is_an_avm_.html
Brian.. i see where your coming from now. i agree, this topic is off track from the original post. i only jumped in due to that statement toe-stepping statement. my thought is defining the scope of work to meet your 90 day liquidation criteria can also be requested,. but now i understand your viewpoint. and i consider that you possibly need this estimate faster than it would take to order and receive a 1004, since i dont live in CA ;) i don't think the 90 day liquidation factor was reflected in that original statement. its a little detail in the wording which makes a difference.
As for Zillow, in a way it's good that the general public has access to the information in a easy to access manner, via a map and prices. If they want to see the sales (drive-by) and make a guesstimate based on selecting the better comps, more power to them. I believe Z allows also for that filtering. The consumers need to be empowered to a certain point, and i draw the line at access to 'live' MLS, but that's another topic.
Having an appraiser per state to review the Zestimates is ridiculous. The consumer can do all the legwork or ask a Realtor or Broker for their opinion. In the in the end, when the loan needs funding because the consumer eventually buys, our phones will ring. so no worries about Z here.
enjoy the weekend.. take some time off!
I am not trying to stir up trouble here, but where did the 90 days come from for "liquidation" value? Over hundreds of properties, we have always worked on the timeline of 30 days to "liquidate" residential and 45 days on commercial. That has been pretty much the norm across the country, in my experience.
R
but where did the 90 days come from for "liquidation" value?
My investors; they just want to know what at what price it will sell in 90 days, Rich.
Thanks, Nick.
Zillow "Guess-Idiots" appear 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.
If anyone wants to sue , I will certainly be happy to be on board- I'm so sick of Zillow and their estimates taking our hard work and our home values and playing cavalier games.
My Zestimate is so off the mark as to be nuts and , luckily, someone warned me. Zillow is not at all interested and trying to be fair about it either, so, maybe a class action suit is the only answer. This is so unfair to all the families who paid their bills, worked on their homes, and now are being hampered in trying to sell by unfair "Zestimates". Sure people should look further into it, but when someone is house shopping on the net, they look at the house, check the Zestimate, and then decide not to bother if it's way off the mark. People are not going to reseach heavily into a house unless they are seriously interested and they won't be seriously interested till they look at it, and they won't look at it if they think it's way overpriced. That's how Zillow is seriously hurting alot of people- and they don't care. Integrity and pride and doing the right thing has been replaced by the mighty dollar.
feel free to contact me at ims1945@sbcglobal.net
Sue for what??? Because a piece of software isn't accurate? If your Zestimate is off, you can adjust it -- though I struggle with how it's possibly damaging anyone.
Arizona "settled" this many months ago. It's business as usual for Zillow. (you are commenting on a pos tleft in April 2007...)