Monday, April 16, 2007 - Why All The Fuss?

In an article (Click Here to read) on the Inman News website today, it was reported that the Arizona Board of Appraisal has issued two cease-and-desist orders, one in July, 2006 and the second in November, 2006, to claiming that their automated estimates for properties in the state of Arizona are appraisals and are, therefore, illegal without the proper licensing.  Zillow argues that it very clearly alerts consumers that a zestimate is not an appraisal, but an estimate using the data they have available.  They also claim that the majority of the zestimates are within 10% of the sales price of a home.

I, for one, don't have any objection to what is doing.  They are attempting to revolutionalize the real estate industry by offering consumers the information that was once only available to real estate agents through their subscription and membership to the local MLS.  Information that was once gaurded with lock and key is now, in one form or another, available to anyone that has the time and patience to conduct the research necessary to find all of the pertinent information.  We as real estate agents, through our MLS, simply have access to a database that allows us to find the majority of this information in one place, most of which is public information. 

As for the zestimates, as long as discloses in a very clear manner, which they seem to do (Click Here to see their explanation of their zestimates), I see nothing wrong with offering consumers the ability to acquire an estimate on the value of their home.  I'm not quite sure why the Arizona Board of Appraisal has an issue with what is offering, other than they must feel a little bit threatened.

My main concern is that Zillow's claim of being within 10% of most homes' sales price might sound like it's fairly close, but to be $20,000 - $30,000 off on an estimate of the typical $200,000 - $300,000 home in Phoenix is rather sustantial.  And actually in Sacramento they claim that only 73% of the time they were within 10%.  So that means that more than 25% of the time they were even further off the mark than the 10% that they are touting.  I wonder if the numbers for Phoenix are similar???  So just as long as the consumer is aware that their zestimate could be off by quite a large margin and that their zestimate should be considered just a piece of the puzzle when attempting to figure out what their home might be worth, then "zestimate away".

-Steve Nicks