Zillow Busted In Arizona For Not Having An Appraiser License
from the safe-for-now dept
Earlier this year, an insurance agent was found guilty of the unauthorized practice of law for helping a client draw up a will using Quicken software. A couple of months later, the proprietors of a website that offered to help people file for bankruptcy were dinged for basically the same thing. Both of these cases were disturbing because they were examples of a profession (lawyers) receiving protection against new technologies that could help automate their services and over the long run force them to lower their fees. Since its inception, the popular real estate appraisal website Zillow has been attacked by those in the realty profession, since it has the potential to break up the monopoly that brokers and agents have on real estate information. Now the state of Arizona has issued a cease & deist against the site, because it delivers home price estimates without having appraiser license in the state of Arizona. This is nothing more than a baldfaced attempt to protect members of a certain profession against a new service that might undercut their profits. In fact, it was the Arizona Board of Appraisal that delivered the C&D to Zillow. You can see on the board's website that nearly half of its members are professional appraisers that would naturally have an interest in keeping out the competition. While this decision obviously helps appraisers, it's really hard to see how this arrangement benefits the people of Arizona.
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Licensing is NOT protectionist
The question is this - do you really want "buyer beware" or do you want some (and I admit its not the greatest) oversight to insure the service you buy is provided by someone who has at least some qualifications? Hell, I could slap up a website for appraisals, let people give me their credit cards for the appraisal and let my dog pick numbers out of a trash bin as my main basis. Licensing holds those providing the service to a minimum standard of competency. The benefit is the people of Arizona know its not Rover deciding the value of their property, but someone who actually passed a test and knows something of which they opine upon.
Licensing can sometimes be obtrusive but is also sometimes necessary. Besides, no lending institution is going to take an appraisal from that site seriously anyway, so my opinion is that it is the people of Arizona who get ripped off.
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Re: Licensing is NOT protectionist
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Re: Re: Licensing is NOT protectionist
We are creating the next bubble. Some loans files still include an appraisal by a licensed and train appraiser, but they are fewer by the day.
The investors buying these must be morons.
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Re: Licensing is NOT protectionist
1. Zillow does not provide a definitive appraisal. It provides an estimate only. When you go to get a loan for purchasing the house, you are still going to have to get an appraisal from a licensed appraiser.
2. Zillow doesn't cost you anything. So they aren’t getting paid by you. You aren't buying anything from them. You aren’t getting ripped off, it’s just an estimate.
The only real use for the Zillow system, is to give the user an idea of what a house is worth, without having to pay an appraiser. Again, it's nothing but an estimate. So the appraiser will still get paid if the house ever sells. The only payment the licensed appraiser is missing out on is the casual owner who gets their house appraised every year just to see how much its worth. Even if he has no intention of selling.
Plain and simple, this is a blatant attack on competition where no loan is involved. Because the need for licensed appraisers isn't going to go away. But the monopoly on the information they provide is going away.
Oh, and licensing is protectionist when the goal isn't to protect the user, but to protect the business models and revenue streams of the industry.
Just as an aside, do you work for the real estate industry?
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Re: Licensing is NOT protectionist
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Re: Licensing is NOT protectionist
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Re: Licensing is NOT protectionist
The entire concept of a license is to protect a special interest group.
Apparently you're in that category.
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Re: Re: Licensing is NOT protectionist
The start-up fees are another form of eliminating competition.
My daughter has a cosmetology license (another laughable joke & huge waste of money) to CUT FREAKIN' HAIR! Gimme a break! If an African-American woman wants nice ethnic braids, there are virtually NO licensed cosmetologists who can do the work--only the neighborhood free-enterprisers (who get busted frequently by the Cosmetology Nazis).
Oh . . . and don't even get me started about appraisers. What a cozy little monopoly they enjoy.
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Re: Re: Licensing is NOT protectionist
So you'd be totally cool with people opening their own medical practice without having attended med school?
Licensing is another form of regulation (think drivers license). Whether or not it's fair depends on the licensing requirements. If the license is based on a state exam, the costs are small, and they are issued to anyone, then I think it's fair. If the license is restricted to members of a private organization or guild, then I think that's unfair and it becomes protectionist. I think we can all agree that offering free advise should not require a license. However, at least with the Ziinet, they were charging a fee, and the advise was customized for each client. This was not a blog site, and it only came up because the paying client was unhappy with the advise they were given (it was wrong).
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Re: Licensing is NOT protectionist
How many totally USELESS "Microsoft/Oracle/HP/Project management Certified MORONS" have for the "paid certification" programs cranked out? How many totally LAME Realtors have you run into ? Let's not even TALK about Contractors.
Secondly - Estimates are just that. Estimates. Learn how to f_cking read. I think this gets me more than anything else.
I live in AZ - the real estate market refuses to get with the program that the boom years are over - they desprerately cling to the hope and claim that it is still hot, trying to sell homes at ridiculously overinflated prices, and are attacking anything that is contrary to their claims.
I know from experience, as I just spent 9 months looking and arguing with realtors, and finally bought something for over 7 figures (call ME an idot), that was fairly close to what it should have been priced at. Hopefully - I will not lose my shirt down the road.
Yes - it is buyer beware. That means "Don't be a lazy shit - Do your homework"
Zillow, if anything, provides you with a consolidated look at some of the relevant data you need to make an intelligent buying decision. You have to exercise just as much censorship judgement with Zillow, as you do with Realtors who will spin nearly anything, (let's give them some credit) and just want you to buy over the shortest buying cycle possible.
The concept is simple, and nothing new - information = power.
Control the information, and you control the market.
Zillow, at is roots - is free speech.
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Re: Re: Licensing is NOT protectionist
A business license is a vehicle for enforcing regulations. Is everyone here in favor or eliminating regulations on businesses?
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Hey, appraisers are people, too. Well, not the automated ones.
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Access
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Free Speech?
This is the same as telling anyone who sells on ebay they need an auction license.
Its silly. Welcome to 2007.
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Re: Free Speech?
"Real estate appraisal, property valuation or land valuation is the practice of developing an opinion of the value of real property, usually its Market Value."
Zillow can never know what condition a property is in, what kind of view it has, what the landscaping looks like, what kind of functionality it has, and a myriad of other factors. All it analyzes is comparable sales and their prices based on what the tax rolls say. For instance, my home says 5 BR on the tax rolls but it's really a 4 BR. Zillow thinks I'm in a 5 BR and overvalues my home. It can work the other way too. Never say never, but it's highly unlikely that Zillow will ever be able to reach the technological ability to replace an actual live human being walking into the home.
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Bummer
Witty Nickname, I've supported enough Access DBs to feel your pain. Try supporting a VB6 app that was outsourced to India, there's a reason they only get paid $5 an hour to write code.
Does this mean someone can send a C&D letter to Google Earth or do they have licensed cartographers working on staff?
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Getting ready....
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Re: Getting ready....
(Absolutely HATED explaining to customers the reason why their publisher files were totally useless and we would have to recreate them in Quark anyway...)
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Appraiser License
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Are Appraisers That Great?
These people are often less qualified than their licenses would suggest. For example, I was having a chat with my last real estate agent (who did a good job, BTW) about interest rates in 2005, and I said it looked like the fed would be driving them up soon. He said "the fed has nothing to do with mortgage rates". This guy had been in the biz for 20+ years! If you don't know how wrong he was, take an econ or finance course. And I paid this guy $30,000 to know less than me about his industry. But I had to, because he knew the secret handshake (ie had a license).
On to Appraisers. In my experience, they are sent from the lending institution to verify that the house is worth at least as much as the offer that was made on it. Why is it that, in my experience, the house somehow mysteriously always is worth exactly what the offer was, and exactly what the bank needs it to be worth to clear the mortgage? One bank told me my house had been appraised at the loan value, which was good, so I asked when the appraiser had been inside the house, since I didn't let him in. Apparently it was a "drive-by" appraisal. What a load of BS! I put $60k into improving the inside of that house, and this guy appraised it from the curb!
Remember when people used to celebrate the idea of machines that could "do human's work" and liberate us from the tyranny of jobs. (Disney, the Jetsons, Asimov...sorta) Guess that's not going to happen.
Technology (and trade, and the times) will displace many people, over and over again. Change is the only constant. People will need to re-train and find other things to do -- and most do because they have no protection. Yet Guilds, Licensed bodies, quotas, and other artificial barriers to change will provide some friction before those protected are eventually forced to change with the times.
There is no fairness that an engineer will lose her work the day it becomes an economically good decision to ship the work to India, yet when that engineer is forced by unemployment to sell her home, she must overpay non-competitive agents and appraisers in the process.
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Re: Are Appraisers That Great?
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Similar concepts
As stated by someone before While Zillow may provide you with Ballpark pricing, financial institutions still require certified appraisals.
So if all Zillow does then is provide baseline ballpark information that speeds up the sales process then it actually should in theory expedite the amount of time before the official appraisal is called.
So unless the average consumer pays an appraiser for multiple speculative appraisals of multiple properties while trying to narrow down to a single purchase, I simply don't see how Zillow is causing harm. From my experience most people only pay for the appraisal as the final step of the purchase.
If appraisals are down for appraisers in AZ I would have to think it would have more to do with a sluggish real estate market then with Zillow. One would assume the real estate industry in Arizona keeps stats on appraisals vs sales. There should be some sort of industry trend in the market that keeps tabs on the conversion ratio of appraisals to sales. If such a stat existed that would be the real tell-tale sign of what if any impact Zillow may have had.
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Damn right you want at least the bare minimum for a licensed doctor - that would certainly be better than the bare minimum for an unlicensed doctor. That might not work so well for you.
That said, appraising is hardly a life-or-death sort of endeavor, and it's really hard to justify some BS licensing for something so straightforward.
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Re:
If both the licensed and unlicensed doctors went to similar medical schools and both doctors completed their respective medical programs, what additional value is their in licensing? If health and safety is such an important issue, then why not have doctors write exams every five or ten years?
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Also, to reply to the comment about the "drive-by" appraisal. If a drive-by appraisal was done, it was because that was how your lender ordered the appraisal. Typically, if a borrower is borrowing an amount that is much less than the value of the home - say, a $50,000 loan on a property that was purchased at some point in the recent past for $300,000, the lender feels that they do not have as much risk, therefore they can do just a driveby appraisal. This can bite them in the butt, though, when the home is trashed on the interior. We do very few drive-by appraisals as there is very little price difference between a drive-by and a full appraisal.
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Don't believe me? Try disputing the appraisal you receive as part of a loan application. I did - my appraisal on a re-fi came in low by at least $30K. Houses don't sell all that often in my neighborhood. One of the comps that was used was a foreclosure sale for the same model home one street over. The property had been trashed by the previous owner - yards dead, concrete poured down the drains, light fixtures and toilets stolen - the works. When I complained about the low appraisal, the loan company sent out a second appraiser. The second appraiser gave an identical value. When I questioned the second appraiser, she said that the loan company had sent the first appraisal to her, and that the first appraiser was the president of the local appraiser's association and "a close personal friend". The first appraiser told me that I could appeal to the state board, but "good luck, you still won't get the loan because there are only two appraisers approved by your loan company for this area". No way he was going to admit his mistake - he wouldn't even admit that using a trashed foreclosure sale as a comp without any correction factors was unreasonable. Dickhead cost me about $15K that I had to put into the deal to get the loan closed. In the long run it was still worth it to get the lower rate on the re-fi, but it was still very wrong.
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As with any field, there are good appraisers and bad appraisers and, yes, corruption does exist in the field, though I have never witnessed any personally.
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Reader's Digest Article
It was a lady's testimonial of striving to list her house herself.
She was then Blacklisted, as one of the agents at a local place later admitted to her. All of the real estates never told anyone about her house even if they were looking specifically for that type of house. They would not list it even where there were open forums and they were technically required to.
She was blacklisted by all the companies.
Main reason: She did it herself and used an online site.
Go ahead and look up the article, it is all there.
I am sorry I do not recall which state she lived in.
However, the article also mentioned that the state of Utah has passed laws against people using online sites to list their house or help them out, and go figure, most of the people passing the laws there were old lawyers from the real estate business.
B --- S
Gawd I hate how corruption and money runs what seems like everything.
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To Vincent Clement, RE Feds setting rates
My agent "said 'The fed has nothing to do with mortgage rates'. This guy had been in the biz for 20+ years! If you don't know how wrong he was, take an econ or finance course."
You responded:
"Since you appear to be more knowledgeable than the real estate agent, why don't you tell us exactly what the fed has to do with mortgage rates? He is more right than wrong."
Look at the chart here:
http://www.bankrate.com/brm/news/fed/fedchart.asp
I think you'll agree that my agent was not "more right than wrong."
In brief, the fed does not respond to the price of money as set by anyone else - yet it does not have the privilege of setting rates in a vacuum. It responds to factors such as the price of competing financial instruments, the pace of the economy, availability of money, and job markets. The other lines on the chart follow the fed rate, with a surcharge for margin and risk, and some variance based on market competition.
If you still don't understand how the chart works, and which lines are causal and which lines are responsive, I repeat my suggestion of courses (or books). It's simply not my job to educate my agent, nor this blog about finance. This is a tech blog, after all.
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Derek, it would be gentlemanly of you ...
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Zillow C&D for doing arithmetic?
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The above
As for zillow, it is a fantastic tool. The amount of data they give you all in one place alone... is priceless. Think about it... they process the same information that the public and the licensed "professionals" have access to. Zillow is an advantage for the simple fact that they know they would not succeed if their data was way off. Second, they cannot be biased or influenced as to property estimate. It's all based on data and is automated by using methods, calculations, and formulas, not some "licensed professional" thinking about how much to set the price for... thinking 3-6% of: ???,???,???.
Zillow is not far off. And I wouldn't be suprised if most people came up with numbers close to zillows by using listing info, comps, and all of the other info calculated.
Zillow is not busted. Zillow is Free.
Real estate pro's can be dangerous to your finances.
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Zillow
Public data is usually 3 months sometimes as much as 9 months old...
Do you really want to price your home on old data in a moving market? If so I'll sell you some Enron stock for $50 per share!
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1. the data is >3 months old.
2. the home is a custom, spec or otherwise specialized home where neighborhood equivalents might not apply.
*Of course everyone thinks there home is 'special'.
I also live in AZ. Unlike the previous poster, I think our market was due for it's upward correction. Prior to the upswing, we were below national averages and yet hosting many of the nations fastest growing areas.
Cease and desist on Zillows free speech should never have been allowed by the state court. Clearly a frivolous lawsuit, an effort at business disruption and they should pay for it. Literally, they should be charged back for losses.
I'm going through the home sell process myself. It's amazing how many shady people come at you from all sides trying to get a little piece of the action. They are very aggressive. Even realtors who want to hook you up all sorts of bed buddy professional services.
This business model is responsible for the overall inflated housing market. A business model, I might add, which keeps young people from ever being able to afford a home.
Anti competitive legal activity just makes me want to fuzbo (by owner). Savvy buyers are going to start looking for non-agency homes as a way to get more home for their dollar.
As for black listing, well that doesn't scare everyone. Nor does false statistics published to blogs on web sites.
Agents, brokers, you want our business, honest up, be competitive and get real.
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Go Get A License
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Zillow C&D
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Zillow
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This is Why Licensing is Important
You're right that a license doesn't guarantee competence or ethical behavior. Then again, locking your car door at the mall doesn't guarantee no one will break in. But each improves the odds in your favor. Most licensing agencies require licensees to pass a test of basic competence. Most licensing agencies also require a certain amount of continuing education. And most will investigate complaints against their licensees. Again, these improve the odds of competent performance.
Do you really want the guy who graduated law school with a bare passing standard, and who would never pass the bar, to be able to go out and represent people? Or the woman who can't add and can't remember what documents are involved to be able to hold herself out as a real estate agent?
I don't have a problem with Zillow -- it's more of an educated guess than anything else and, as other commenters have noted, it operates in a field where the report of a certified appraiser will be required before anything really important is done. But helping someone write a will? Or helping someone file bankruptcy? Those are huge life-changing (or, in the case of a will, life wrapping up) events. There should be a way to at least cull some of those who have no idea of what they're doing out of the herd, and licensing is the best way we've got at the moment.
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Zillow
The board of appraisal is simply protecting the Public's interest. As a licensed professional in two states, I find that valuation sites such as Zillow give homeowners unrealistic "valuation (s)" of their property (s).
Zillow does not take into account many different factors involved with the valuation process. Zillow simply provides a average of sales, which , 9 out of 10 times is way off.
How am I going to explain to Joe Blow homeowner that Zillow does not take into consideration Functional or External Obsolescence, or highest and best use, grandfathered use, dirt roads vs. paved, school districts, historical districts, lot size, overall condition, amenities and appeal, gated communites, age restrictions, ....the list goes on and on. Give me a break!
I believe the board has had enough of bogus claims against appraisers "under valuing" a property , because Joe Blow homeowner visited Zillow whom said that his property was worth a Trillion dollars.
It is truly disturbing that the author would even think that Zillow would "under cut" our business. Do you really think we are a bunch of computer generated idiots?
Plain and simple, there are laws that have to be followed in the valuation process. Ponder this, does Zillow comply with USPAP in regards to keeping a work file for each valuation given? There are standards and laws that apply to the valuation processes, whether its appraisal , appraisal consulting , etc... I would love to see their work files.
Also, what are the repercussions that Zillow has for miss valuating a property? Do they carry E&O insurance? Are they liable for misleading the public? No, I don't think so.
I applaud the Arizona Board of Appraisal for not only protecting the public, but protecting the Appraiser as well.
I must say, countless times, my work and experience in Appraisal has been questioned because of these valuation sites. Simply, the homeowner or interested party just gets a number from Zillow. There is no analysis explaining the result. Sites like Zillow demote the public trust in the appraiser and valuation process.
Zillow does not follow, FNMA Guidelines, USPAP , the list goes on and on.... and yes, that matters in the world of appraisal.
Zillow is not just doing math, not at all. Zillow is giving a estimate based on their interpretation of market data, which is ...guess what.... considered a appraisal, appraisal practice and appraisal consulting.
Oh , and by the way, licensing is very important. Lets take a look at the H&L crisis , hummmm!
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Zillow
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Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
Blog: http://personalmoneystore.com/moneyblog/
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Forex
Home: http://www.tradingforexreviews.com/
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Zillow
It's strange to get to know about such matters about them.
Though in internet anyone can build the business very easy in compariso with offline. We should be more vigilant before applying to such companies.
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Most states see bartering as a form of compensation. By Zillow offering an estimated value or range of value to draw traffic to the site this is their contribution to the parties that is in fact compensating them and that is the advertisers. In all factuality USPAP does not consider compensation as an element of an appraisal.
What Zillow and the others like them will have to do is argue the harm the law does to the consumer. By calling for a cease and desist order the Arizona Board of Appraisal is following the law as it is currently written. I wish Zillow the best of luck and I think that it could be very expensive in legal cost unless they can tackle this on a national level.
One last bit, Arizona also issued warnings to appraisers, real estate brokers/agents and mortgages in reference to fraud so this issue may be part of a bigger across the board action.
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Zillow
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Great!
http://www.cartitleloans.net/
http://wefinancerims.net/
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Zillow, Zilo.com, CONGRATULATIONS "Arizona Making-Leight"
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www.hoganschool.com
Thank you Arizona Making-Leight. Thank you so much, Arizona Making Leight. Can you also use that violin to write dirges? Write one for your father...too illegal for me!
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