Seen on the newswires:
The Arizona Board of Appraisal issued two cease-and-desist letters to the company that operates the popular real estate Web site Zillow, saying it needs an appraiser license to offer its “zestimates” in Arizona.[.]
The site has been criticized by real estate professionals and others concerned about its accuracy.
A complaint was filed in October with the Federal Trade Commission by the non-profit National Community Reinvestment Coalition, alleging Zillow was misleading consumers and others with its estimates.
Zillow issued a statement Saturday saying it disagreed with the board’s view, and pointed to an opinion issued by a national appraisers standards group that said online estimates aren’t formal appraisals.
I’m going to have to side with Zillow here and say that the Arizona bureaucrats need to get a life.
Perhaps Zillow could do a better job in disclaiming that their “zestimates” are not formal appraisals, and that they’re simply the product of a modeling algorithm that looks at transactions in the local market. However, it is a nifty tool to play with, and something handy for a homeowner or someone looking at potentially relocating to play with, to get a feel for the market and to fuel some planning, without needing to go through the hassle and expense of getting a full, formal appraisal.
It’s a good conversation tool. When you get close to refinancing, selling, or purchasing a property, clearly a more detailed appraisal, one that takes into account information that can’t be gleaned from modeling based on public databases, is called for.
Let’s just chalk this up as another lesson that perhaps needs to be taught in school: models are potentially powerful tools, but they shouldn’t be abused by overriding common sense.
1 response so far ↓
1 David G from Zillow.com // 17 Apr 2007 at 11:15 am
Hi Mike, it’s David from Zillow, thanks so much for your support.
What makes the AZ complaint even more odd is that we do in fact clarify that a Zestimate value is no substitute for either a CMA or an appraisal. We do so on every single page of our site via a link to an article that explains “What’s a Zestimate value”. Here’s that article: http://www.zillow.com/howto/Zestimate.htm. We also provide a link to that explanation as well as detailed measurements of Zillow’s accuracy in the search box on the home page. You literally cannot search for a house on Zillow without being presented with the information you discussed. Zillow’s accuracy metrics are here: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm.
Here’s an update on the AZ issue;
Zillow has received two letters from the AZ board of Appraisers and we disagree with their suggestion that Zillow.com is providing appraisals. That assertion is simply false; Zestimate values on Zillow are the output of our proprietary automated valuation models (AVM) and are not the result of an appraisal. We hope to clear up this confusion soon and are focused on productively resolving this matter with the AZ Attorney General’s office.
Thanks again.