Jonathan Lansner in the Orange County Register writes of the state of Arizona's Board of Appraisal's attempt to ban Zillow unless it gets itself an official state appraisers license. Zillow is a website that provides to private citizens a free computer-generated guess about possible home values–a "zestimate," if you will. Which is distinct from an "appraisal," because, well, you need a licensed trained professional for that, as Arizona is trying to insist. Some excerpts from this account of protecting politically connected jobs, er, supporting vital professional licensure:
In some ways, this is a silly regulatory debate over what Arizona defines as a legal appraisal of a property and who can legally do such home valuations. This smells like a regulatory body protecting its own flock……..
More importantly, Arizona v. Zillow feels like a shot across the bow to the budding business of arming consumers nationwide with critical information they need to navigate the muddy waters of a housing market.
Zillow is a pioneer in putting computerized home valuation models in the hands of consumers……
Where do these automated home price values come from? High-brow math splices together transactional nuggets – like prices of recent purchases near a home or how similar homes are selling in a region – to arrive at ballpark estimates. Bankers have been using these tools for a decade or more as a backstop for human-made appraisals as well, in some cases to make mortgage loans.
………. Zestimates are usually seen by industry insiders as rough guesses of a home's value. In fact, Zillow acknowledges an error rate of plus or minus 7.2 percent within its nationwide price database of 51 million homes. In fact, one consumer group has complained to the Federal Trade Commission that Zillow's estimates too frequently mislead the public about real estate values.
But this isn't a fight about whether Zestimates are any good. It's about whether or not you should see them.
If numerous professionals in the business are using automated valuations – from lenders to some appraisers to investors who buy mortgages – the consumer should be able to get a taste of these models, too.
More on this from the Arizona Republic.