It’s unclear if you are an appraiser from your post. Forgive me if you are and this sounds condescending as a result. It’s not intended to be.

Not one of the many automated valuation models being hustled as alternative ‘valuations’ is consistently credible.

It’s truly unfortunate that various state laws permit them to refer to their products as any type of valuation or value estimator.

It results in a widespread misrepresentation of property value to buyers and sellers alike.

If thinking of selling, ALWAYS get opinions from full-time, local real estate agents or brokers with many years in the business. Traditionally at least three such opinions and marketing plans should be obtained. Select the most rationale-not the highest price. Note I also suggested a marketing plan. That is just as critical as pricing. It will affect both the time it takes to sell your property, and possibly the amount it sells for.

If you are still unable to confidently conclude a value, then you may want to obtain your own appraisal. Please understand it cannot later be used in the financing of the property due to regulations as to who a client may be and who is allowed to order an appraisal for loan purposes from a government sponsored entity (GSE).

Now my buddy is selling his house. Tampa is on fire. In this market he is asking an outrageous price to just fish. Zestimate said his house was worth 480. He put it on the market for 847. 2 days later Zestimate now says his house is worth 836 !!

So he puts his house on the market asking price and zillow doubles the value based on that??

Seems to me Zestimate is Bullzestimate.

And do we think this can fuel buying frenzys, and then selling frenzys?

Now you have to also think about urban flight. Markets are shook up but we have not yet seen the full effects.

Given the everything is o.k. tune we’ve been hearing from many realty based organizations, it’s doubtful they’ll be straightforward and forthcoming with honest recognition of these new and unusual trends. The game is who can kick the can for the longest before losing track of it.

Think Zillow can come up with an algorithm for that?

“Once the social distancing and quarantine measures are relaxed, we should see this temporary pause evaporate, and will have potential buyers return with the same enthusiasm.” – NAR® Chief Economist Lawrence Yun
==========================
JULY 2020
https://gsiexchange.com/warning-from-shiller-urban-home-prices-could-decline-at-this-rate/

https://gsiexchange.com/banks-braced-for-more-economic-hardship-have-set-aside-billions/

You ain’t seen nothing yet…. Baby, you ain’t seen nothing yet.

https://www.zerohedge.com/personal-finance/it-starts-mortgage-delinquencies-suddenly-soar-record-pace

Haven’t checked in a while Craig, but yes with +/- 900 appraisers all within +/-25 miles of me, can you say oversupply. Boy, I sure don’t miss those conversations with low level staff explaining that just because their are 500 appraisers closer than me and their algorithm places a preference on distance to, that I’m still the best man for the job (15 minutes away). Keep in mine however, as of yesterday the county of San Diego just broke a record as all real property is now valued at 605 billion.

Seek the truth

Shades of clear crapital!

There were around 7,500 of us when licensing first started back in ’91. A lot were driven out by low fees, but many others driven out by BREA policies. Still others by the heavy hand of FNMA and AMCs along with TAF.

The ‘trend’ toward automation was announced by MISMO and pursued by FHFA LONG before any shortage could be alleged. Full automation of the entire loan process has been the mismo objective since before the UCDP was created.

Few take the time to read it but they will also try to replace C&I…which will be even easier once they agree to certain assumptions of “market” leases being acceptable.

I’d love to chat more but don’t want the speech police to come after me. That said, I pretty much agree with everything you said. Keep fighting the good fight friend.

Advantages to this process will allow a shorter time frame on closing dates and inspection periods.

The ad makes people think they will get a 1 day appraisal when in reality it is an appraisal order.

Nick every single appraisal any of us do has a census tract number as a required element. There are no exceptions for federally regulated transactions.

Even where no bias or prejudice is intended, language that the PC Police have ascribed as being ‘potentially racist, biased or prejudicial’ has long been prohibited.

Buyers clearly do care and weight ‘neighborhood or school or special amenity neighborhoods in terms of ‘desirability’, but no appraiser can consider this. We are even prohibited from having people in pictures which could be indicative of race. Its gotten so nuts that property owner’s own photos of religious icons, family members or ‘other’ symbols adopted special groups such as ‘rainbows’ must now be obscured lest appraiser’s clients are somehow unduly influenced.

Yet with all these prohibitions we continue to (mandatorily) provide lenders, underwriters and any other report users with census tract information which can be accessed with only a few keyboard strokes.

THAT data has ALL the prohibited facts. It identifies all races in the area and their relative predominance; it identifies sex, married and unmarried percentages, ages, and in more recent years it now identifies significant gay-lesbian-TG-etc. if measurable.

Any lenders self-developed or off the shelf risk software can easily factor these into scoring with no one the wiser. Certain ignorant vendors have even confessed that they build algorithms to incorporate demographic information . Look up Quantarium /Xome in other published articles on the topic).

I have personally only run into one instance (on a commercial loan) where a lender was so stupid as to say (through the loan broker) “Oh yeah, I know that area” (based on zip code); and in reference to a property in unincorporated County area adjacent to Compton, CA “Its a bad area and we aren’t going to loan there.” Clearly a prohibited race or crime perception-based decision. One in which I couldn’t get the loan officer to divulge which lender made that statement so they could be turned in.

Overt bias is not real common. Covert prejudice or ‘risk scoring’ by all the wonderful, unregulated AVM companies out there is another matter.

Their clients can simply tell them they want higher risk ratings assigned via algorithm for certain prohibited census factors than for others, and nobody is going to be the wiser.

Because regulators don’t care enough to look at the pitfalls inherent in automated systems.

I know of NO appraiser that cuts a value or adds value based on racial or religious populations. I know of none that conflate a borrowers ‘social’ status or preferences with property characteristics. I cant say the same for AVMs tied to census tracts or even zip codes.

Proponents of the ongoing secret prejudice claim they need census data to ‘make sure no one is being discriminated against’, yet it is the very tool that they use that makes ongoing discrimination feasible despite all the fair lending and equal credit opportunity laws that are passed.

Until census data is made an illegal provision in any appraisal or any other aspect of lending decisions, the discrimination will continue.

In CA there were 20,000+ licensees about 2007. Today, there are 9,752 licensees.

This trend will continue.

The demand for boots on the ground Appraisers has declined substantially for a number of reasons.

There is still an oversupply of Appraisers, as indicated by a proliferation of low-fee AMCs.

A large number of mortgage loans today involve Appraisal Waivers, including mortgage loans obtained by Appraisers.

Fast, easy, convenient, cheap.

This trend towards automation will of course increase.

No animals or humans were harmed by way of the above post.

Seek the truth.

The vast majority of brokerages choose to participate in Zillow. As they also do with Redfin, Realtor.Com, etc.

Most buyers find properties they want to buy first with Zillow or the other on-line R.E. sources.

Over time Zestimate should become more accurate, with more data, Artificial Intelligence & better algorithms.

But, Zestimate will never replace Appraisers. Other AVM models are used by the GSE’s, not Zillow.

How is Racism built into the Zestimate model? What proof or study supports this accusation?

I’m not a fan or proponent of the Zestimate by any way. It’s simply a novelty used to sell advertising on Zillow’s web site. Not used or trusted by GSEs.

That’s on me, I thought she was suggesting that appraisers are the problem. Totally agree that there are inherent issues with Big Data, and that Big Data can lead to disenfranchisment, but blanket accusations of racism are not the ‘ONLY’ reason for this. It’s a bit reductionist to always play the race card. Especially with stats/meta data. Google had to readjust their face recognition algorithms because it didn’t do such a good job recognizing human from other primates. You may have heard about that in the news as it was especially egregious. For a company like Google though…I don’t know how intentional that was.

Here is a great article explaining the “Racial Bias: Redlining in the Modern Era”

http://appraisersblogs.com/racial-bias-modern-era-redlining

Ok, I’ll bite. How is racism baked in? Please source your assertions.