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Wednesday, April 18, 2007

Zillow vs. Arizona Board of Appraisal

The blogosphere is buzzing this week with stories of the two Cease and Desist letters that Arizona's Board of Appraisal sent to Zillow.  Apparently, the Arizona Board of Appraisal is accusing Zillow of offering 'appraisals' in Arizona without the proper licensing. 

To me, this sounds like something they could resolve by simply tweeking the verbage and/or more prominently displaying their Disclaimer and definition of Zestimate.  If it's about confused consumers that think Zestimates are appraisals, obvious disclosure that Zestimates are NOT appraisals should suffice.  Personally, I think Zillow could be more accurate and I think they should re-assess their accuracy rating (perhaps break it down by area since Zestimates for some geographical areas may be more accurate than for other areas).  For example, I don't think Maricopa County Zesitmates are particularly accurate - Zillow has consistently and severely overpriced the Arizona homes that I've checked.  But I think consumers, not the Arizona Board of Appraisal should be the ones to demand changes to Zillow.  And if it's really about the consumer, I think the Arizona Board of Appraisal will find a simple yet reasonable compromise to allow Zillow to continue offering Arizona Zestimates.  But many are claiming that Zillow is being treated unfairly simply because of their success.  Many other websites also offer home value estimates, as do many Arizona real estate agents and brokers (CMA's).  Yet the Arizona Board of Appraisal has not sent Cease and Desist letters to any of them.

However, it's important to note that A.R.S. 32-3602 (1) specifically states that licensed Arizona real estate agents and brokers do NOT need an appraisor's license to offer:

"an opinion as to the price of real estate for the purpose of prospective listing or sale if this opinion is not referred to as an appraisal".

In other words, Arizona law allows real estate agents and brokers to give CMA's and Opinions of Value without an appraisor's license.  There are also several other exceptions to the Arizona law requiring real estate appraisors to be licensed.

When Zillow was first launched, it was rumored that Zillow's CEO Rich Barton wanted to transform the way people buy and sell real estate, much like Expedia.com (also founded by Rich Barton) transformed the way we buy airline tickets.  To take it a step further, many thought Barton's plan for Zillow was to eliminate real estate agents (and their commissions) the way that Expedia.com pretty much eliminated travel agents.

Perhaps now Mr. Barton and Zillow will be interviewing Arizona real estate brokers to be on the Zillow staff, so that they can continue to offer Zestimates "appraisals" in Arizona!

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard

Great American Realty, Inc.

Cell: (480) 695-6672
Email me

Posted by Shannon Hubbard, AZ Realtor & Computer Guru on April 18, 2007 | Permalink


In my post above, I said that Zillow should "...re-assess their accuracy rating (perhaps break it down by area since Zestimates for some geographical areas may be more accurate than for other areas)."

I stand corrected. After playing with Zillow a little (I haven't used it in awhile), I see they do break their accuracy rating down by area here:

and here:

It says Phoenix is accurate within 10% of the selling price 72% of the time, and the area gets 4 stars or "Best Zestimate" rating for accuracy.

That means 3 out of 4 houses have a Zestimate that's within 10% of being accurate...I'd say that's very generous and still not very good in my book. I'd hate to be that 4th guy who loses big due to totally underpricing or overpricing his home based on an incorrect Zestimate! Call a REALTOR!

Posted by: Shannon Hubbard | Apr 25, 2007 1:37:56 PM

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