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.
Oh, I definitely see the appeal, and I see the ease, and I see the savings on the cost of a real appraisal. But I think our discussion has been focused on the issue that people are either duped or blindly believe that a Zestimate IS and appraisal as opposed to being in lieu of an appraisal. Since both parties have equal and opposing interest in the valuation, both parties should be responsible for determining if the value is right for them. Zillow was not intended to be an end solution, but a piece of the puzzle. They say so on the very top of http://www.zillow.com/howto/Zestimate.htm
With regard to:
Rats, I couldn't find where the disciplinary actions were on their page http://www.appraisal.state.az.us/ (and I'm sure it's right there in front of me! Argh!) I would assume that most of those complaints were dealing with things like providing an inappropriate appraisal. As Zillow is not passing thier information off as an appraisal, I don't think it's an apples-to-apples thing.
I know that you and I differ on this point, because you have said that regardless of Zillow's clear claim that a Zestimate isn't an appraisal, it IS an appraisal, while I maintain that if they aren't presenting any form of communication (written, web result, email, etc.) as AN APPRAISAL, it isn't an appraisal. And that is what the courts are definitely going to have to determine, and they really are the only ones with the authority to make that interpretation. I believe that ultimately, thier finding will be in line with my thoughts. I do think it says a lot that the Appraisal Standards Board of the Appraisal Foundation http://www.appraisalfoundation.org (The banner reads: Authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications) says (as Zillow's President cites) "The output of an Automated Valuation Model (AVM) is not, by itself, an appraisal." http://commerce.appraisalfoundation.org/html/2006%20USPAP/ao18.htm
Sean
The problem is that the opinion they are citing is about 10 years old and well predates anything like Zillow. It's referring to a much different scenario, where the information is not readily available to the consumer in his/her home but comes by way of a licensed appraiser using the AVM, so even if the data is passed through unaltered, it will still be passing through a licensed individual who can present it in an appropriate context.
I cast a vote for "approximate valuation".
Although Zillow's services is based upon the same AVM (automated valuation method/model) methodology used by lender approved AVMs.
Flaws as I know them:
- Zillow assumes that all houses are in the same condition; doesn't distinguish between move in condition or fixer upper.
- Zillow doesn't accomodate for physical inspections/appraisals as do traditional appraisers.
My final thoughts...great point of reference and valuable tool for initial deal analysis; the trade off for free is unreliable and inconsistent information.
Regards,
Scott Miller
Scott,
Agreed. I'm definitley not supporting quality of the values that Zillow provides. Zillow definitely does not consider any improvments that have been made. The way they do this is by using the last sold price on the property compared to other properties in the area. But this does not reflect any improvements that the owner has made since THEY purchased the property.
I think it's a great WAG, and if your property is par for the neighborhood, it might be close at best. If you are much more improved or if the condition is far below the rest of the homes, the number is much farther off.
I'm only supporting the opinion that Zillow should be allowed to continue to do what they are doing.
Sean
I don't the nature of the cease and desist, but I'm with you (they should be allowed to operate)...how much want to bet the respective lobbyists for realtors and appraisers have kicked up this sh*t storm to protect their turf and keep home valuation proprietary?
Regards,
Scott Miller
I think it's a great WAG, and if your property is par for the neighborhood, it might be close at best. If you are much more improved or if the condition is far below the rest of the homes, the number is much farther off.
I'm only supporting the opinion that Zillow should be allowed to continue to do what they are doing.
Sean
I use zillow all the time and find it very helpful when my clients dont know the value of there property, zillow gives you a good estimate and in some cases a look at the property and nieghborhood. We know its not an appraisal but it is a good starting point.
i'd have to agree with sean and tackleberry. referring to part of tn-apprentice's argument reagrding people being injured by accepting zestimates as gospel: if you need an appraisal because you're going to sell a house (due to divorce, to settle an estate, or whatever), you'd be hard pressed to find any realtors, or banks that would take you seriously with a zestimate as your home value. personally, if it involves my money, i'm sure not going to take an instant internet valuation as the final say. are people out there going to make that mistake? sure. there are some really dumb people out there. often, it seems like they're far more common than just being "average." if it wasn't for these "average" people, everyone would be an investor. i'm not here to protect everyone, and neither is our government. if you're not sure about that, you should research it further. more important than this zillow argument, is the mistaken modern american belief in government to settle society's smallest problems. many other countries believe in the supremacy of their government over men, but that's not what made our country what it is today. you could rebut with a lot of law quotes, but the law is always contradictory -that's what happens when politics, money, and daily fads influence laws, over the course of hundreds of years. ever since law became an industry, the world has been plagued by lawyers, and overly-sensitive politically correct "vicitms."
to quote waylon jennings "stop the world, and let me off." i've had enough.
-dean
p.s. yeah, i got a little of topic. and it rambles. if i was older i'd be referred to as quaint and eccentric. right now i'm just crazy. 8)
I think that there is a significant point that is being overlooked here. Zillow, and any site like it that gets "valuation" data from a public database is analyzing 3 to 6 month (more in some cases) OLD data. In a market that is moving fast in either direction that's data I don't want to base a major decision on.
The best data to base a valuation on is PENDING sales and Days on Market for comparable properties.
Realtors have this information because that's what they do! Sure you can make the case that it should be public but it will be as soon as the deal closes and records.
Zillow and free sites like it should be make those sorts of disclosures and then everyone would be happy - especially me!
Geoff Green
Realtor Extraordinaire
Phoenix Arizona
:D I'm looking forward to getting slammed on this one.