I call them "Zestappraisals," or "Pop Appraisals." The AICPA calls them "Appraisals." (agents, Realtor)

[MikeJaquish]

In this month's Journal of Accountancy, the American Institute of Certified Public Accountants has cut through the crap and called a spade a spade.
Zestimates are appraisals, they say.

Now, if legislators and regulators would fall in line with facts, and protect consumers as they should...

https://www.journalofaccountancy.com...al-online.html

[WiseManOnceSaid]

Originally Posted by MikeJaquish

In this month's Journal of Accountancy, the American Institute of Certified Public Accountants has cut through the crap and called a spade a spade.
Zestimates are appraisals, they say.

Now, if legislators and regulators would fall in line with facts, and protect consumers as they should...

https://www.journalofaccountancy.com...al-online.html

There are online appraisal companies that some banks use that never set foot in the home. This is a disturbing trend that threatens to put formal appraisal companies out of business as long as the banks find online appraisers worth the risk and their information reliable.

[JustMike77]

They've been trying to eliminate appraisers from the lending process for YEARS. What I find most telling in the article is that the "discount real estate firm" has no idea whatsoever what the client's house is worth, so they send him to Zillow. You get what you pay for, I guess.

[I'll Say]

So this tool allows the user to combine comp data with human thinking. Not just an algorithm. It depends on the purpose - is it good enough for a buyer to use as input to decide their offer? Is it good enough to use to price your house? With a reasonably intelligent and aware buyer or seller I think the answer is probably 'yes'.


My husband and I bought and sold many homes with varying levels of agent help. When we bought and sold without agents we went through a process very similar to what I think this tool guides you through. Basically what an agent would do. Collect recent comps, throw out oddballs, adjust for differences between subject home and closest comps. Perhaps minor adjustment for any significant market movements, for example, if you have some comps 6 months old and it's a fast moving market. This gave us a range - can't remember the numbers but let's say 500k to 515k as an example.



Is this rock solid? Of course not. But that process enabled us to decide (and support/justify) our offer. Of course as a buyer, we offered at or below the low end range of what this exercise suggested. Say an offer of 495k for example (it was turning to a stronger seller's market and it was a unique place that we loved so we didn't want to come in too low). If I were selling, I might do the exact same process and price at the higher end (depends on how fast i needed to sell, etc). Maybe 510 or 515k if I wanted to avoid overpricing.



Seems like this tool just facilitates a "normal" and common sense process of valuing a home for the purpose of buying or selling. It's not rocket science.

[MikeJaquish]

Originally Posted by WiseManOnceSaid

There are online appraisal companies that some banks use that never set foot in the home. This is a disturbing trend that threatens to put formal appraisal companies out of business as long as the banks find online appraisers worth the risk and their information reliable.

Originally Posted by JustMike77

They've been trying to eliminate appraisers from the lending process for YEARS. What I find most telling in the article is that the "discount real estate firm" has no idea whatsoever what the client's house is worth, so they send him to Zillow. You get what you pay for, I guess.

Yep and Yep. Gotta wonder... How do the algrorithms adjust for so much dog pee in the carpet that you want to ralph when you open the door, and the subfloor has mold in it and has to be replaced?



Does the good ol' Freddie/Fannie 3304 indicate the property passes the Smell Test?

[I'll Say]

i would also say that if there is a concern about consumers being confused and misled by pop appraisals and giving them too much credence, the fact that the NAR owned site, realtor.com provides pop appraisals may lend more misleading credibility to the numbers in the minds of consumers. To some consumers it may not matter but to others, they may see the source being related to "Realtor" as more "official" in terms of the reliability of the estimate. IOW, more of a false sense of security around the figures based on who is seen to be providing it. And then there's how each site explains the figures:



Zillow explains its 'Zestimate' with a link directly from the figure as follows:
"A Zestimate® home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value."


There is a further link directly from that statement which provides further detailed info and cautions and begins with:
"The Zestimate® home value is Zillow's estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home's value and is not an official appraisal. The Zestimate is automatically computed daily based on millions of public and user-submitted data points."


There is also a lot of further information directly off of that page regarding the accuracy of the data, etc, etc. All quite open, transparent and cautionary in nature. Another example,

"We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

• Getting a comparative market analysis (CMA) from a real estate agent
• Getting an appraisal from a professional appraiser
• Visiting the house (whenever possible)"

In comparison, Realtor.com provides the following description for their estimate when you click for more information at the figure:
"Estimation is calculated based on tax assessment records, recent sale prices of comparable properties, and other factors."


No link to any further information from that statement above. Not a cautionary statement in the least bit. In fact even if I search around the site away from estimate figure of a home in about 5 minutes i cannot find ANY information on how their estimates work or ANY cautions around their use. If I google "realtor.com estimates" I do find some very mild suggestions to see a realtor in the 'advice' section of the website (away from and not linked from the estimate itself). More like a very vague marketing blog type article rather than formal and specific consumer information around the estimates as Zillow provides.



My conclusion is that Zillow makes at least some efforts with cautionary statements (although it would be better if there was a statement directly on the page next to the estimate with no clicking necessary) while the NAR owned site realtor.com does not seem to even try and there is little or no transparency relative to what Zillow provides. Therefore Zillow would appear to be more responsible in its use of these figures. Add that to the fact that realtor.com with the word "realtor" in the name / URL may appear to some consumers as more 'official'.


So once again I wonder why agents who are so passionate about this are not using their NAR membership as a platform to address THEIR OWN organization being party to the irresponsible use of pop appraisals. Why?