Zillow Ordered to Cease and Desist

I'm sorry, Nick.  You said:

why would i respond again without hearing your perspective first?

Rich Kruse said it best when he said:

The actual absolute best source for true market value would be an actual sale of the subject in an arms length transaction without contingencies where neither the buyer nor seller have a compulsion or unknown outside driving factors influencing the sale.

I concur; that is my opinion.  Absent that data, I'd rely on (in what I consider to be most valuable) a Broker's Price Opinion for quick sale value, next a Form 1004 from a licensed appraiser, then a drive-by 2055 appraisal from a licensed appraiser, then an AVM like the Zestimate.

I didn't mean to skirt over your comment. I didn't intent to ignore your comment.

I would like to hear your opinion on this:

So should licensed real estate brokerages be forbidden from giving opinions of value, Nick?

In essence, that is what the proposed legislation in Arizona attempts to do. Of course, they won't tell you that, they'll just say it's to get Zillow.

Nick, look at the comments on this thread; they are ridiculous.  Licensed real estate agents smearing another licensed real estate company for offering pricing opinions.  They are exhibiting the very bad behavior they indict. 

Nick, you said:

but its still an estimate. of what? value. hhmm sounds like an appraisal to me

Is a CMA or a BPO an appraisal?  Licensed broker's estimate value everyday. 

You said: if it looks like a duck, walks like a duck, smells like a duck, you can dress it in a zebra suit, but its still a duck.

I admit, Nick...it's a duck ! 

A zestimate is an opinion of value.  The AZ legislation will prohibit licensed real estate brokerages from offering their opinion of value.  Is that a good thing?   I'm okay with it if appraisers are the sole source of opinions of value.  We won't need Realtors then; we'll rely on the opinion of value as submitted by the state-sanctioned appraiser

This is my opinnion and I could be wrong, guys.

Peace.

R

Hey Brian.

ok, so i'll play for a while, and then we'll see where it goes and if i get some reciprocation. maybe this comment will clear things up a little.

i agree, the string of comments is a mess. a lot of cross talk and opinions. which is good in the sense that people are expressing their thoughts, even if some of the players are standing way out in left field, or on the bleacher, or outside in the parking lot. 

I agree with the comment Rick said. it seems very accurate to me and i like how you accurately stated, "absent that data". Becuase if your valuating something, you most likely don't have the luxury of having an exact comp with same location, condition, etc unless, again, you live in Edward Scissorhand neighborhood.. i.e. cookie cutter-ville.

Buy the listed order of preference i can't entirely agree with.  I can't say that a broker price opinion would come before a 1004, as the BPO is a condensed version of a 1004. a little bit of the first page regarding the market conditions, trends, price ranges, etc.. and then a grid, all on one page. in essence the 1004 is more accurate, IMO, because it also lists a few things a BPO doesn't.

1. the number properties FOR SALE in that market that are comparable to the subject (top of page 2 on 1004)
2. the number of properties that have sold in the past 12 months that are comparable to the subject (top of page 2 on 1004)
3. date and sales prices of the comparable's prior sales (which should help one determine trends even further), whic is under the comps grid on the 1004, pg2.

so that is my reason for a 1004 over a BPO anyday of the week. obviously if time is an issue, then a BPO will give you a good idea, but i would not go as far as to say it's more accurate (and there was never a time crunch issue in this thread).

my stance is,.. more relevant data = more accurate appraisal., er uh estimate of value.

-now onto the matter at hand, the matter to which i personally take offense to.. and sorry to keep quoting you, cause i know that can be irritating, but..

"The absolute best source for true market value is a neighborhood real estate professional.  Not an AVM, nor an appraiser. "   --note-- real estate professional, which indicates a Broker or a REALTOR(R) to me.

so the question posed, to me, afterwards is worded as "licensed real estate brokerages", which is not the same thing to me.  i understand the latter is more in line with the topic of the post.. but my comment was initially due to the former, a "real estate professional" is "the absolute best source for true market value".

I seriously doubt, and i may be wrong, that a brokerage is calling other REALTOR(R) on comps for subsidiaries/concessions, which IMO skews the TRUE value of any home's value. (note we both said 'true')
i say this for obvious ego issues involved once a person has reached the point they have their own brokerage. it can happen, they may call, but highly unlikely.

"So should licensed real estate brokerages be forbidden from giving opinions of value, Nick?" -no. they are very capable of esimating a value at that point in their career. but better than an appraiser? not sure about that.

now your turn..

"The absolute best source for true market value is a neighborhood real estate professional.  Not an AVM, nor an appraiser. "  why do you think this?  as an appraiser i take offense because this is what i do, whereas it's only one thing a real estate professional does.  i like to think that i do one thing better than just one thing some one else does.    i'm sure a mortgage broker who does it all day long, would agree that the guy that works it as a second job is not as good. i hope he/she would agree, at least.

is my ego in the way? or do i have the right to feel my toes have been stepped on? (i prefer the answer to the other question, this last one is rhetorical.)

Your ego isn't in the way, Nick. Don't be offended; it's just my opinion for the type of lending I do.

Why do I prefer a BPO to a 1004? My expertise in lending relies on liquidation value; I look for the price for a 90 day close. A 1004 relies in historical data that may go back 6 months (and the report itself can be 6 months old).  So, a sale from July, 2006 won't be reflective of the current liquidation value in April, 2007.

Again, it's my opinion.  I rely on local real estate brokers as experts for property value, which, as I've stated, is the what Rich defines as the sale value in an arms length transaction.

When I'm brokering a loan, I rely on whatever the ultimate lender wants for a valuation report.  When I'm brokering a HELOC. I BANK on the AVM because I know it's going to be more generous. 

Now, I'll look at comps and say "this house will sell for $685,000" in 90 days.  I'll order a BPO to back it up if I'm nervous.  I'll order a 1004  if I'm more nervous.  So what's that tell you?  (It means that I DO value the appraisal report as a supporting opinion)

Nick,

I appreciate the discussion.  We are debating minor points.  The real issue is that the appraiser's in Arizona are trying to outlaw a certain real estate brokerage's price opinions; that's protectionist.  The piling on Zillow in this thread by other real estate brokers is, well...astounding to me. 

Zillow is a poorly refined AVM. AVMs are run by state licensed mortgage banking and real estate companies all the time.  They are used to confirm, probe and asses value.  Many AVM products that are used privately by these companies are no better than the Zestimate.  Making AVM information available to the public should not require an appraisal license as an AVM is not defined as an appraisal.

Should Zillow work on improving their AVM?  Absolutely.  Should the Arizona Appraisal Board focus on what they provide (which is infinitely better than the Zestimate) rather than dwell on requiring a free, inaccurate AVM product to redefine the automated valuation and lending industries?  Absolutely.

Making Zillow obatin an appraiser license for its AVM will take many of the most important risk modeling tools out of lenders' hands when making the decision to lend on a property.

Disliking Zillow for giving out bad information is one thing; disliking Zillow for giving out free information is completely different.  I wrote more about it in my post on my blog: http://www.blownmortgage.com/blownmortgage_blog/2007/04/when_is_an_avm_.html

Brian.. i see where your coming from now.  i agree, this topic is off track from the original post. i only jumped in due to that statement toe-stepping statement. my thought is defining the scope of work to meet your 90 day liquidation criteria can also be requested,. but now i understand your viewpoint. and i consider that you possibly need this estimate faster than it would take to order and receive a 1004, since i dont live in CA ;)  i don't think the 90 day liquidation factor was reflected in that original statement. its a little detail in the wording which makes a difference.

As for Zillow, in a way it's good that the general public has access to the information in a easy to access manner, via a map and prices. If they want to see the sales (drive-by) and make a guesstimate based on selecting the better comps, more power to them. I believe Z allows also for that filtering. The consumers need to be empowered to a certain point, and i draw the line at access to 'live' MLS, but that's another topic.

Having an appraiser per state to review the Zestimates is ridiculous. The consumer can do all the legwork or ask a Realtor or Broker for their opinion. In the in the end, when the loan needs funding because the consumer eventually buys, our phones will ring. so no worries about Z here.

enjoy the weekend.. take some time off!

I am not trying to stir up trouble here, but where did the 90 days come from for "liquidation" value?  Over hundreds of properties, we have always worked on the timeline of 30 days to "liquidate" residential and 45 days on commercial.  That has been pretty much the norm across the country, in my experience.

R

but where did the 90 days come from for "liquidation" value?

My investors; they just want to know what at what price it will sell in 90 days, Rich.

Thanks, Nick.