Zillow & Appraisals - Novelty or Professional Valuation?
Joshua D.Pro Member
BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votesHey everyone. I wanted to bring up a recent news story to see what your thoughts are. I reported on our blog yesterday a story, Zillow Banned in Arizona by Regulators. Is the Novelty Wearing Off? where the mega corporation Zillow has been issues a cease & desist order by regulators to stop operating in Arizona.
I see why the order was issued, based on the feedback I get from people who use the site. What I'm interested in is your feedback on the situation. It seems that there is a perception from its users that it is offering property appraisals.
[size=18]Do you think Zillow is doing enough to stop the perception that they are offering appraisals?[/size]
Discuss the blog post, Zillow, the case, etc.
I don't think Zillow does anything to convince people that they are not giving appraisals (heck, the title of the site even says "Real Estate Valuations"). In fact, if people really thought that the values were not appraisals, they wouldn't go to Zillow in the first place.
I'm seeing two trends around here: (1) people advertising the "Zestimate" along with a link to the Zillow page on their "for sale" adds (Craigslist types of listings, not MLS) and (2) sellers going in to "correct" the Zillow information (e.g., change that it is a 2 bath, not a 1.5 bath, etc.). Both of these suggest to me that sellers (and thus, by implication, buyers) are believing these estimates to be somehow meaningful.
I find it hard to believe that I'm defending Zillow, as I hate struggling with the Sellers who argue that my CMA (comparable market analysis or competitive market analysis) is lower than Zillow's Zestimate. (Funny, I never have them argue that Zillow is lower than my CMA...) However, I do think that it's crazy that Arizona has issued a cease and desist against them because of the confusion over whether their Zestimate is an Appraisal.
To begin with, when you go to the home page of Zillow.com, IMMEDIATELY below where you put your address, you find a link that says "About Zestimate™ values and accuracy." Click on it and you get the following page: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm. Sentence 4 and 5 pretty clearly state: "A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal." Um... is that confusing? IT IS NOT AN APPRAISAL. I don't think it could be anymore clear.
Okay, let's assume that a disclaimer that clear and present isn't enough to keep the village idots from assuming it's an appraisal. I suppose to assume that, we need to realize that they are too lazy to click on the link or to slow to understand the words "About Zestimate™ values and accuracy." Furthermore, we need to assume that they ASSUME these are an appraised value because if they READ anythying, they would realize it ISN'T an appraisal. But let's assume that the disclaimer isn't enough and they enter their address and get to the page that has their property info on it. If we look up 5716 Crowbush Cove in Las Vegas, we get the following page: http://www.zillow.com/HomeDetails.htm?zprop=58574781. On it says:
Zestimate: $290,571
Value Range: $264,420 - $322,534
Now, an APPRAISAL does not have a RANGE, it has a VALUE. Here, it says the Zestimate (which has the word ESTIMATE in it, by the way) is a price, and the VALUE RANGE is a $58,000 SPREAD. That's a range of TWENTY PERCENT.
Furthermore, the same "About Zestimate™ values and accuracy" link is available below the photo.
I think this cease and desist order is a farce. What next, no more Kelly Blue Book or NADA or Edmunds.com? We're doing a great job of PC in this country, dumbing everything down to the absolutely lowest level. If someone can't read the disclaimers and if they can't figure out that a price range of 20% isn't an appraisal, why should the rest of the world that do have several brain cells to rub together suffer?
I hope Zillow kick's AZ's butt on this one.
Sean
Sean Brown, NARREIA
CEO/Founder
The National Association of Residential Real Estate Investment Advisors
I think you are splitting hairs and focusing too much on a literal, rather than practical, definition of "appraisal." Zillow says it is giving "real estate valuation." What is an appraisal fundamentally if it is not a valuation? There's a reason that certain profession, like medicine, law, and real estate appraisal are regulated by the government, because when they are performed by someone without the proper training there can be bad consequences. Zillow says in its disclaimer that it's not providing an appraisal, and then it proceeds to produce what is, effectively, an appraisal. (Just because they say it's not an appraisal doesn't mean it's not one -- I can't say "hey, I'm not a real estate agent, but let me help you sell your house for a fee...")
The reason the Blue Book example doesn't apply is that vehicle appraisal, unlike real estate appraisal, is not a licensed profession (at least, not in my state). If it were, then I'm sure companies like Kelley BB would be facing the same problem Zillow is.
Consider these bits from Tennessee law:
Now that's Tennessee, not Arizona, but I can see how a Real Estate Appraisal Commission could legitimately question the legality of online "valuations" of real estate when looking at laws similar to these. The biggest question in my (non-legal, non-appraiser) mind is what exactly does "valuable consideration" mean, and does Zillow, because it has advertisements from which it presumably makes money, qualify as an appraiser and thus need a license. I wouldn't be at all surprised to see more states doing the same thing as Arizona.
TN
I disagree. The case that's being made is that nobody other than a real estate licensee should be allowed to make a valuation of a home. Well, every single home purchaser since the dawn of time has done that by spending money -- an amount they felt was adequately fair to justify the purchase -- to buy. Every single landlord who isn't licensed (99%) does that every single rental period when they price the rents.
Regardless of how TN law is written (Lord knows there are a lot of vagueries, inaccuracies, outdated and conflicting law), it's just an estimate based on finite information. I'm an agent too and I always suggest people look at the Zillow numbers--if they help in the negotiation, use them; if they don't, don't. It's another data point. Zillow clearly makes an effort to represent the values as accurately as it can given the types and breadth of data it has. Good on them.
And to suggest that real estate licensees are generally using MORE SOPHISTICATED or SUPERIOR data sources is laughable. Most agents look only at MLS and minimal historical data which is...um...exactly what Zillow tries to do. Good agents know something about the intangibles; things Zillow struggles with. But, if half the agents (I'm being generous) can give crappy CMA estimates then why shouldn't Zillow be allowed to?
[size=18]A funny twist: [/size]if Zillow hires a licensed broker as one of its company managers, then it can provide exactly the same data and avoid the lawsuit. Manager doesn't even need to be full time. A part time consultant will suffice...Zillow...do you hear that???....I'm right here and available at the right price!
:woohoo:
-Jeff
I think the difference is that in your examples, people are doing the valuation for themselves. What requires a license is when you do it for someone else. The practice of law is the same way. You can do all your own legal work, but you can't do someone else's without a license.
By the way, it's not a real estate agent or brokers license that is required, it is a Real Estate Appraisal license (though our law specifically makes an exception to allow real estate agents to give valuation opinions to their clients). The Real Estate Appraisal Commission is an entirely different entity and different group of people from the Real Estate Commission, which licenses agents and brokers.
Your example says "prepared by a real estate appraiser." Zillow isn't an appraiser (which is what the stink is all about), so the "analysis, opinion or conclusion prepared by" Zillow is, by this definition, not an appraisal.
Zillow is saying that it isn't an appraisal and they have not claimed to be an appraiser.
Zillow isn't "soliciting an appraisal assignment," they aren't "preparing an appraisal," and they aren't "preparing an appraisal report," and they clearly state that their Zestimate isn't an appraisal.
I don't think the material you cite supports the arugment very well and in some regards support's Zillow's side.
Sean
But my point is that just because you say it isn't an appraisal, doesn't mean that it is not one. Arguing over the semantics of Tennessee law is pointless here, since they have not (yet) had legal trouble here. (By the way, in Tennessee even oral opinions about a property's value are considered appraisals, so I think here they'd have a really hard time defending their actions).
The bottom line is that it is the law that defines what an appraisal is or is not, and it is the law (not Zillow) that defines whether an certain activity is the practice of Real Estate Appraisal, and whether someone is or is not an appraiser.
You seem to be making the circular argument that since Zillow is not a licensed appraiser that it shouldn't have to have a license for its activities. But by that logic all licensing of any profession would be moot. I could just hang up a shingle, start practicing law, add a disclaimer that I'm not engaged in the practice of law, and then argue that the laws governing the practice of law don't apply to me because I'm not a lawyer (it says so right on my door).
Arguing over the semantics of Tennessee law is pointless here,
I would point out that it was you that posted the three citations of Tennessee law, not I. Interestingly enough, you STILL cite law in Tennessee when you refer to oral arguments. While I agree, with regard to the Arizona issue, Tennessee doesn't matter much, but it could very well be Tennessee that files the next suit against Zillow, so I do think it's worth debating.
You seem to be making the circular argument that since Zillow is not a licensed appraiser that it shouldn't have to have a license for its activities.
No, that is not what I'm saying at all. Your definition of an appraisal was "an analysis, opinion or conclusion PREPARED BY A REAL ESTATE APPRAISER..." What Zillow is preparing IS an estimate of valuation, but it is NOT being referred to as an appraisal (and has explicitly been cited as NOT being an appraisal). Since their "analysis, opinion, or conclusion" has not been prepared by a "real estate appraiser," and since they have stated clearly they are NOT appraisers and their estimates are NOT appraisals, by your definition, their estimates are not appraisals.
I think the crux of our difference here is that:
YOU:
...my point is that just because you say it isn't an appraisal, doesn't mean that it is not one.
ME:
Just because someone wrongly assumes an estimate of value is an appraisal, especially when explicit language has been provided stating that it is NOT an appraisal, does not mean that it is an appraisal.
I think this is a reasonable test. If I printed out the Zestimate and presented it to a lending institution that required an appraisal, do you think any of these institutions would accept it as an appraisal? I think not.
Your argument is not on point. I would agree that if you pointed to a BMW 740iL and said "That is not a car," it does NOT mean that it isn't a car. However, if you pointed to a cocker spaniel and said "That is not a car," it does not matter whether you said it was a car or not, it is not and never will be a car. Zillow is not pointing to a piece of paper that says "Appraisal" on it and saying that it isn't an appraisal. They are pointing at a valuation that contains a 20% range, that was not prepared by an appraiser, and has been clearly marked as NOT being an appraisal, and they are saying "It is not an appraisal."
Try your argument in reverse. What if Zillow said "Our Zestimates are Appraisals." Does that make their Zestimates appraisals? I think not. Once again, there isn't a lending institution out there that would take a Zestimate as an appraisal, regardless of what Zillow might say they are.
An appraisal is just that, an appraisal, a document prepared by an appraiser. Anyting else is not an appraisal. Zillow is not presenting the idea that their estimates are appraisals and have clearly stated that they ar not. If someone STILL believes that a Zestimate is an appraisal, I do not think that the rest of the world has to suffer for their ignorance.
The bottom line is that it is the law that defines what an appraisal is or is not, and it is the law (not Zillow) that defines whether an certain activity is the practice of Real Estate Appraisal, and whether someone is or is not an appraiser.
I would agree with you here, and this is where the cease and desist followed by a lawsuit will bear out the real conclusion. The law is full of interpretation and changes regularly, it is not set in stone, and it will be interesting to see how it is interpreted. I hope that the Arizona court system or later the Federal court system will show that the Arizona Attorney General's Office (who is whom I assume filed the case) has filed the order frivilously. I just hope that the rest of our intelligent society doesn't have to be inconvenienced by the moronic minority that can't take the time to read that Zillow's Zestimate is NOT intended to be an appraisal.
Sean
BTW - Once again I must comment on how I cannot believe that it is I that is defending Zillow! I have no interest in them what-so-ever and the Zestimates that are on the high side are a PITA for me. Still, I hate when ignorant morons dumb down society in the face of an innovative, handy tool.
I'm actually less interested in the law itself then the perceptions out there. The way I see it, most common people (not agents, mortgage folk, appraisers) still look at the valuations as appraisals. Yes, users can click on the small link provided and see that Zilllow doesn't claim their values to be appraisals, but most people simply won't do that. Until Zillow comes out and promotes the notion that they are not giving appraisals, people will continue to think that they are.
Interesting. First of all, I don't think that even a majority of people think that a Zestimate is an appraisal. I think they look at the Zesitmate and say "Is that what my house is worth?" (Usually followed by "I know/thought it was worth so much more!") But if pressed to answer the question "Do you think that Zillow's Zestimate is an estimate of your house's value or do you think it is actually an Appraisal?" the majority would know enough that it isn't an appraisal.
If the non-industry people do not know the difference between an appraisal and someone giving them an estimated value of a home (with a 20% range), I don't really understand how they are harmed by the misperception. So they don't take the time to read the notice that this isn't an appraisal and they assume that the Zestimate is an appraisal, what is the worst that could come of it? All someone has to do is say "Click on that link there... see, it says it's not an appraisal." Is the danger that... man, I can't even think of anything that would be a danger. Do they think they are going to take a Zestimate to a bank? I just don't see how their ignorance is so dangerous that Zillow should be banned.
Once again, why should the ignorant dictate what the rest of us can have access to, especially when there is no real danger in it?
Sean
You can't argue that an appraisal is defined as being done by an appraiser and that an appraiser is defined as someone who does appraisals. A value estimation is an appraisal. Nobody would give one hoot about Zillow if they didn't think it was telling them the value of their house. Zillow's claim that it's not an appraisal should only be said with a nod and a wink. Zillow wants to have its cake and eat it too.
If Zillow were just providing factual information, it could present the raw data alone and let the user come to his/her own conclusion about value. Instead it provides, in large type, a single value (and later, on other screens and in smaller type, a range). That's what the people want, and that's what Zillow provides.
(I also find Zillow very irritating in that it always says it's not compatible with my version of Firefox, which happens to be the latest 2.0.0.3 -- Let's get with the times, people!)
Sean
The "several" sites from your google search not withstanding, here is how the Arizona Revised Statutes (Section 32) define the terms:
As far as what zillow does, you are wrong again. It absolutely gives you the zestimate a page before the "range" estimate, and in much larger type. I have included the page you get right after entering the addresses (this is of a house I looked at about a year ago):
No range there, not even on the bottom table where it also lists the zestimates of the other properties (relevant market data). It does appear later on, on a later page, as I stated in my previous post:
Note the font sizes, just like I stated (range much smaller than zestimate). Now, what was it you said, because I'd like to keep it fresh in my mind. Oh yes,
By the way, everyone agrees that Zillow claims it's not giving an appraisal. I don't know why you keep quoting it. Yes, they claim it, they're trying to cover their butts, I just don't buy it. Notice the should in my statement that it "should be said with a wink and a nod."
Yes, you have selected on of many, many definitions of an appraisal. It does not make it THE definition. There are several that you can cite and several that I can cite, and there isn't a defnitive answer. I'm thinking anyone reading this thread can determine that just because you found a definition that suits your needs, there are many out there that suport mine (provided via the google link in my previous post).
The view you present is an interesting one, but it's NOT the DETAIL page about the property. Click on the link of the address in the view you show and you get http://www.zillow.com/HomeDetails.htm?zprop=58574781 which has exactly what I described. So are you telling me that not only is the link to the clear explanation of what a Zestimate is not good enough, but they have to tell you to go to the details page to get the DETAILS of the property? Giving half the answer is not the way to win your point just as not telling the whole truth is akin to lying. (I'm not calling you a liar here, I'm making the analogy of leaving out information.)
Zillow can't help it if the users can't follow the intuitive information they provide. I've said it before, and I'm saying it again, if the lowest-common-denominator users are too stupid to use the tool, the rest of us should not be penalized for their substandard genetic code or their lazy backsides.
Sean
Again, I didn't just present a view, I presented the view that comes up when you search for a property. As I have always said, you get the range later, after, and on a different page from where you get the zestimate.
You get the zestimate first, and then, later you get the range (and at a smaller font size).
Now that I have not only shown you that I am absolutely correct in exactly what I said about a zillow ["Instead it provides, in large type, a single value (and later, on other screens and in smaller type, a range)."], but also verified it, I would like a little explanation about your rant on me, the accusations, and the seemingly unnecessary use of capitals letters which only belittle your argument's credibility.
Sean - This is where you are completely wrong. The users you call the "lowest common denominators" are the average person. Other then a handful of non-professionals, most people I talk to think they are getting an accurate appraisal of their home (I talk to a lot of people!).
Don't go and start insulting people here. . . if the average guy misperceives what Zillow is doing, then they are somehow doing something wrong.
That said, so far I've actually really enjoyed the debate going on here. Keep it clean . . . stay to the argument at hand and keep away from insulting one another. Thank you.
Sean - This is where you are completely wrong. The users you call the "lowest common denominators" are the average person. Other then a hanful of non-professionals, most people I talk to think they are getting an accurate appraisal of their home (I talk to a lot of people!).
Don't go and start insulting people here. . . if the average guy misperceives what Zillow is doing, then they are doing something wrong, PERIOD!
That said, so far I've actually really enjoyed the debate going on here. Keep it clean . . . stay to the argument at hand and keep away from insulting one another. Thank you.
Yeah, it's a good discussion of the issue, I believe. I still think that most people don't think that it isn't an appraisal but some WAG, some sort of estimate. Is it possible to put a poll on this thread? Or is it possible to start a poll and then move these posts under that thread? I'd love to see what the responses would be! I'd suggest the poll be:
What do you think the number you get from Zillow, the "Zestimate" is?
a) An appraisal.
b) An estimate of the property's value.
c) The number of deodorant soap bars that it would take to fill the property.
d) A killer way to drive traffic to your ad driven site.
LOL, obviously just a. and b. unless you can come up with another good answer to throw in there. But a poll would be awesome.
Cheers,
Sean
Ok, I'll jump into this lively debate and take Sean's side. In spite of what Joshua has experienced with the people he comes into contact with, I am with Sean in that I can't imagine *anyone* believing that Zillow data represents a *true* appraisal. Anyone who has ever purchased property knows that an appraisal is done by someone visiting the property, taking measurements, noting the condition and neighborhood, most often checking out comparable properties from the outside, etc. And then the appraiser mixes that all into a recipe to come up with a value (which magically equals the contract price in most cases but that's a different debate for a different day...).
I don't work in real estate like you guys so maybe it's the fact that I work with highly educated people in technology (I'm not judging or assuming who you typically interact with - just classifying who I interact with to give a perspective). Most people know about and even use Zillow for information (as do I) but I haven't met anyone who believes Zillow to give more than a ballpark estimate and certainly *not* a value that you could take to anyone and consider an "appraisal". To me, Zillow is just another source of free information - no different than trulia.com, ziprealty.com, domania.com, any mls access I can get, etc. and it's honestly hard for me to answer if they put in enough disclaimers because I've always considered it to be an information-only site from the first visit.
Obviously we can debate back and forth about what the general population believes about the site and nobody will ever be 'right' so I'll respect other's opinions and hope they respect mine (they don't have to agree). I think what concerns me more is that once again, the government is trying to regulate in an attempt to save people from themselves. It's perhaps not a great example, but if you're going to protect people from themselves in this case, why not outlaw lease-options for example as well (I know Texas has)? After all, we all know that by-and-large, it is landlords who win this game as ambitious lessors believe they will magically turn around cash and credit issues in a short timeframe in order to purchase a property. May as well protect these people from themselves too because we all know that they rarely follow through on the purchase which just means they wasted even more money than they needed to and continued down the spiral of poor money management (this is not based on experience, just what I read about the reality of lease-options & odds of actually making the purchase).
Anyway, feel free to tear my post apart but this is one view from outside the profession.
I think this is exactly why I even got into this discussion. I can't believe that the government has to step in in a case like this. I would understand if Zillow came out and said "These are appraisals" and then the people were damaged by using them as appraisals. But that's not what is happening here, and I have yet to determine what damage is being done to those who wrongfully assume that a Zestimate is an appraisal. Keep the predators away, that's fine, but this is a case of excessive governenmental interference in my opinion.
Sean
But the argument from the government's side is going to be that the reason true appraisals work that way is because they (the government) force anyone who is doing appraisals to be licensed, and if someone is doing them some other, less professional way, they shut them down for operating without a license.
Here's an example. What do you think would happen to me if I (without a contractor's license) started describing myself as a "handyman," and then proceeded to take jobs from people where I was doing structural work on their house? Shouldn't the people know better than to hire a "handyman" for a job that obviously needs a contractor? Of course. Would only idiots who probably deserve what they get hire me? Of course. Am I really engaged in doing contracting work even though I say I am not? Of course. Would I end up in front of the state contractors board accused of practicing contracting without a license? Of course. This type of thing happens all the time. That's what these government agencies do, like it or not.
Well, there's lots of potential for damage, and it all comes down to why they wanted the appraisal in the first place.
Imagine a couple going through a divorce. One of them is going to get the house, but they need to determine the value of the house so the other can get an equitable compensation through a portion of the other assets.
Imagine a group of heirs dividing up some rental houses of a recently deceased relative. One wants to buy the interests of the other heirs, so they need to agree on a value.
Imagine someone selling their house for sale by owner. They need to come up with a price to list their house at.
Imagine a family in preforeclosure who is trying to work with an investor who will buy their house to stop the foreclosure. The investor can pay all cash and uses the zestimate as evidence that he/she is offering a fair price. (Don't try to tell me that this isn't happening all the time).
In any of these cases a Zestimate that is way off can cause significant financial damage to someone who relies upon it. (And I think these are all realistic scenarios where someone might mistakenly use a Zestimate as an "appraisal" in hopes of saving the time and money it would take to get a licensed appraisal).
Are we missing the point here? Let's talk about laws that make it illegal for one party to estimate the value of a piece of property and provide that estimate to another party. Why? I would gladly pay for the Warren Group or similar real estate research firm to generate background information and estimates for me in commercial, industrial, or residential real estate. I don't know and don't care if they have a license; they provide me the raw data and their conclusion and it has real, trade-worthy value in the marketplace. I want it; they have it; we agree on price. End of story, right?
It's an estimate, meaning a best guess given the information at hand (no need to requote the requotes of requotes). As a home buyer, why should the legislature prohibit me from getting data from anyone other than a real estate licensee? It creates a gatekeeper to publicly available information. I want as much information as I can get -- ultimately it is my decision on how to price the property and not the appraiser's or agent's and forcing me to rely solely on their input to value the property is unnecessarily restrictive.
Aren't these laws simply propogated by the NAR and similar organizations in an attempt to secure a lasting foothold in the real estate business by blocking consumers from free access to available information, laws written when it wasn't possible to find millions of terabytes of public information within seconds on the Internet? Aren't these laws just throwbacks to a time when it was possible to be information gatekeepers...the main value proposition for most agents? And, most importantly, hasn't that era passed?
Agents are given less than 1 hour of training in how to create a CMA. That is hardly comparable to the multi-year training and screening process to become a lawyer or doctor. So, that analogy is innappropriate. Doing a CMA is not complex; investors do them every single day without being appraisers. If banks want to create a formal mechanism they call an "official" appraisal and then license and regulate that process, great. But, it shouldn't be done to the exclusion of any non-bank entities (i.e. people) also estimating value.
[b]
Agents get little to no training on how to do a CMA but are allowed to perform them every day. Legislators will allow homeowners to be given the raw data and allowed to estimate value on their own--it is that much of an inexact science. [/b]So, if it's so easy that it takes less than an hour of training, and so mushy that homeowners should be allowed to do it themselves with no training, where is the harm in letting someone else chime in?
There is a huge difference between giving an estimate and intentionally misrepresenting values in order to extract personal gain or profit. If there is evidence Zillow is intentionally mis-representing values and as a result materially benefits specifically from the misrepresentation, then maybe there is some grounds.
Well, there's lots of potential for damage, and it all comes down to why they wanted the appraisal in the first place.
Imagine a couple going through a divorce. One of them is going to get the house, but they need to determine the value of the house so the other can get an equitable compensation through a portion of the other assets.
Imagine a group of heirs dividing up some rental houses of a recently deceased relative. One wants to buy the interests of the other heirs, so they need to agree on a value.
Imagine someone selling their house for sale by owner. They need to come up with a price to list their house at.
Imagine a family in preforeclosure who is trying to work with an investor who will buy their house to stop the foreclosure. The investor can pay all cash and uses the zestimate as evidence that he/she is offering a fair price. (Don't try to tell me that this isn't happening all the time).
In any of these cases a Zestimate that is way off can cause significant financial damage to someone who relies upon it. (And I think these are all realistic scenarios where someone might mistakenly use a Zestimate as an "appraisal" in hopes of saving the time and money it would take to get a licensed appraisal).
TN-Apprentice, good job in coming up with some good examples in how someone could get in trouble by applying a bad valuation. I think I couldn't come up with those because in each case, I imagine that if I had no idea of how to value a property, I would have sought competent counsel. Doing so would have prevented each of these situations.
The damage in these cases all comes down to the fact that the parties involved were either cheap, ignorant (lack of knowledge or understanding, not stupid), or too lazy to do the right thing and get a REAL appraisal. I know that you have been arguing that these people are "outside the industry" and that your position exonerates them from investigating to any level of detail before they wrongly accept the Zestimate for an appraised value. I would have to say that at some point, we have to let common sense and intuition play into it, and if they don't perform the due diligence on the situation to determine that they should get a real appraisal, why should the rest of us be denied the information?
Someone buying a house should do an inspection. It should be by a licensed house inspector. If you choose to not get the house inspected, or if you choose to have your brother the handy man to inspect it and you get burned, whose fault is it if the house turns into a money pit the day after close? It's called due diligence.
If you have a stomach ache and you go online to a medical website and you read that a stomach ache could be indigestion, should the website be sued if you don't go to a doctor to find out it's an appendicitis?
And one odd thing that this brings up is that an "Appraised Price" is not "THE Appraised Price." Most real estate professionals know that an appraised price is not rock solid number. There are pushers (appraisers who will return higher values) and squashers (appraisers working for buyers who intentionally return lower values as a way to negotiate down a contracted price.) VERY OFTEN if an appraisal comes in low, a bank or one of the parties involved will request a second appraisal to see if they can get the number they need. Many relocation companies have clauses where they will average the "appraised prices" if they are within 5% of each other. What is significant about that is that the appraisals are beyond 5% of each other often enough that they have had to develop that clause.
I'm not arguing that there shouldn't be appraisers. But in the instance of the divorcing couple or the forclosing family or the probate issue, if one wants a higher appraisal to serve their cause, they can find a pusher. If one wants a lower appraisal (the wife is staying in the property and wants the value to be lower to buy the husband out), she can find a squasher. So appraisal numbers can be used to the advantage of one party or another, just like a Zestimate. I just don't know how much government regulation is needed to protect people from themselves, especially when Zillow provides enough disclaimers. If they are willing to take the single number from the party presenting it to them (instead of going online themselves, pulling up their address, and spending a whole 5 minutes reading the information on the page), perhaps they should learn a bit about life, a bit about negotiating skills, a bit about the source of information they are basing their HUGE decision on.
I guess that I'm just frustrated with the fact that we will defend those that do not accept responsibility to look into something that affects them so much, and that a governmental body would feel it's necessary to BAN the information source from the rest of us than to expect the people to be responsible adults. If they don't have the skills and knowledge, they should seek the assistance (most often free) to help them. (If you called a Realtor, they'd give you a CMA on your house in a snap, and it would be free. You could do that to several Realtors.) And as for understanding what the Zestimate is, we're not talking a 40 hour course here. We're not even talking about a 1 hour education. We're saying that these people should have the intelligence to, and be held accountable for, reading a web page or two in all of five minutes. If we can't expect them to do that, what else are we willing to exonerate them from?
Sean
Ah, but this is exactly why Zillow is so appealing to people. It appears to be (in fact, it is) a completely impartial judge that can't be influenced by either party, and thus neither party can accuse the other of toying with the numbers. I could see two adversaries agreeing to use the Zillow numbers rather than rely on a hired (and potentially biased) appraiser.
Hey, I'm all for less government regulation, but that's a legislative issue. I don't necessarily disagree with your position that these laws are excessive, but the immediate question (at least the one Zillow needs to worry about) is how to enforce the laws that are already on the books. A quick browse of the AZ Appraisal Board shows that in the first half of 2005 (I guess they don't update very often) they had 21 disciplinary actions (and other cases still pending). Why should Zillow be treated any differently from other 40-some people a year in that state who are experiencing some consequence for not following the Appraisal laws?