Zillow Gone Wild
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
- Bias in Automated Valuation Models - February 28, 2022
Some very interesting news is surrounding Zillow…
A lawsuit over Zestimates has now gone to a class action status. This will have rippling effects on each and every state and expand the liability to not only licensing, but privacy and consumer fraud.
Read about this change here.
Excerpt from the article titled “Class-action suit aims to halt Zestimates in Illinois”:
“The Zestimates that Zillow posts are misleading and pose as accurate appraisals in violation of Illinois’ legal description of an appraisal, according to the complaint filed by three members of the Patel family and Schaumburg-based CastleBldrs.com. They claim homebuyers read the estimate as an appraisal, regardless of whether it is.
“Buyers tell us Zillow says a certain number for this house, and that’s the number they’re willing to pay,” said Vip Patel. He joined his father, B.T. Patel, and mother, J.B. Patel, the owner of CastleBldrs.com, in the complaint filed in Cook County Circuit Court, which seeks class-action status.
Vip Patel, who’s been building homes for 15 years, said that “in our experience, Zillow is always at least 20 percent lower than the home’s market value, but that’s the number they have planted in the buyer’s head.”
Also just released, Zillow is testing a program to eliminate Agents! They are testing the program in Orlando and Las Vegas and just like appraisers are feeding their own demise with AMCs, the agents have fed their own demise to Zillow. Here what MortgageShots.com has to say here.
Barbara Andersen joined Phil Crawford with Voice of Appraisal to discuss her lawsuit. Listen to the interview below:
The reason I’m retired.
hope this affects AVM’s too !!!
About time, I’m really tired of hearing “Zillow said my house….”
in my market area, most R.E professional know that Zillow’s Zestimates are unreliable.
Most people that take the time to read Zeestimates disclosure KNOW its not reliable once it departs from the areas median values…even then it is “iffy”. It’s about time that American consumers and business leaders alike recognize that not every software program on the internet can come anywhere close to what it pretends to be.
There is a REASON we have Congressionally mandated standards and rules in our profession.
Contract law used to be taught in public education.
The contract clause, article 1, section 10.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
A bill of attainder (also known as an act of attainder or writ of attainder or bill of pains and penalties) is an act of a legislature declaring a person or group of persons guilty of some crime and punishing them, often without a trial.
Ron Paul; If you’re not free to make bad decisions, you’re not really free.
And for Zillow…. Two thumbs down. Boooooooo! The consumers of zillow services did not see the conglomerate and monopolistic setting coming down the tracks, it was as big as a skyscraper, even viewing from very far away. Zillow is not an advocate for free markets. It’s that simple.
Seems like Fannie and Freddie didn’t get that memo.
I appraised a Realtor’s house last week for a sale. She was all upset that her house sold lower than the Zestimate. First time I’ve ever heard a Realtor claim the Zestimate was right.
Has she asked ‘her agent’ why?
That’s how it goes with big data right? If it fulfills the interested parties expectations, it’s all good. If it does not, toss it out. Same for human appraisal services I guess. In hot markets they love me because I’m overzillow. In cold markets they hate me because I’m substantially below zillow. I’ve noticed in the past, some inconsistent avm comparison approaches related to sales type, and overly broad mass data approach. Zillow has always taken the clickbait approach. How to gain digital shares above the competition; click bait, we need higher numbers for higher volume of interest and we need it stat! It’s important to know and reiterate that the underlying goal of these digital programs whom rely on open web exposure, tracks alongside their main priorities; saleability of service and data with increasing viewership and ensuing worth of advertisement increases. Zillow is a consortium of data brokers, not of professional valuators. It’s a day and night consideration, the difference between micro analysis and macro.
Oh Liz, that’s an easy one. Cash drives markets, not credit. If the home was worth it and market climates popping or hot, buyers would have competed among each other with cash over appraisal clauses, bid up terms, and stronger offering positions with more down, if not outright offering all cash. That’s what’s happening in CO which continues the price acceleration despite rate increases. Buyers miss out on deals and quickly realize the few months it takes them to land another purchase opportunity has resulted in a higher price point than as if they would have competed with cash over listing, only a mere few months ago. They’ve all got buyers fatigue at this point, which is why the new normal is to offer cash over appraised value or come correct with strong cash positions. Personally I really despise the turn these markets have taken but it is what it is, I’m just the valuator. I’m not driving these markets, I’m merely analyzing them. Lack of water has stalled out development to fill the market needs. Take that to the bank. If the buyer can get a better deal, they probably will. If sellers could have netted more, they have no one to blame but themselves if they sell for less.
Baggs, respectfully disagree. Cash used to be king, but hasn’t been for years. Think student loans and college professors salaries (or tuition) for a minute. If it were not for the government insured student loans made over the years, There would be no quarter of a million dollar a year salaries for administrators of tenured professors, and classes would not cost $30,000 to $50,000 a semester for a good school.
Same with real estate sales. Anyone that has ever sold as an agent knows that when lending gets tight, effective demand all but dries up. We don’t even have cash equivalence as an element of market value anymore in residential markets. Available credit at reasonable terms is what drives our entire national economy.
The last 2 properties I purchased I purchased for less than other offers because my offer was all cash. No financing clause. It’s ALL of the terms in the contract that matter, not just the price. If I offer you a million dollars for that half eaten sandwich in the fridge, but there’s a financing clause and the associated delays with it, are you going to take the offer, go hungry today, and then watch as it all falls through and the sandwich has gone moldy after 2 months of appraisals and bank paperwork? Probably not. BUT if I offer you five dollars all cash no contingencies and we close now, that might be different.
Cash is king BECAUSE of the terms. Those that feel differently can watch as deal after deal crumbles.
Now is the time Appraisers, Realtors, Consumers, and all similarly situated professionals and non-professional persons should file a parallel class action lawsuit against Fannie Mae, Freddie Mac & FHFA against damage caused to everyone afffected by tools such as Collateral Underwriter that are accurately innacurate and operate in violation of federal and state laws that require a license such as the ones Appraisers have worked so hard for not just to obtain but to maintain. Hopefully such lawsuits continue against Zillow, Trulia, and any other entities that think they can circumvent federal and state laws such as Fannie Mae does by operating outside of the parameters of their Charter that strictly prohibits them from having any business operations in the primary market and mandates their operations to be confined to that of the secondary market only. Enough is Enough with these unlawful operations of these companies disguised under labels such as collateral underwriter, zillow estimates, etc. Take our profession back and leave the true opinions or estimates of values to the licensed professional appraisers.
Brian for president!!!
I’m going to need him to make it easy on me though, if I am to cast that vote. Where is the link? Someone has to start that, and sole proprietors certainly are not as well positioned like the larger firms. But I’ll be happy to sign. I maintain the request that more appraisers argue restriction of trade which ultimately harms consumers, and lack of allowance for this market to be responsive to free market force and effects. We are the free market for this industry, not lenders, not amc’s. The appraiser is the primary free market force for their own participatory presence in this industry, or at least they’re supposed to be. If more appraisers understood the power of the purse, market corrections would happen faster. The government can not save us from ourselves, no amount of legislation can change the cause and effect factors of individual decision making. I continue to spend inordinate amounts of time with detailed letters to amc managers and such, hoping for recognition of more logical modeling. This many years later it seems I may be the rare one still engaging in this effort. Statistics have a proper valid place in analysis. Figures like 25% appraiser participation levels in mortgage lending compared to 10 years ago, is one powerful indicator that the free market for appraisal services is unduly and arguably illegally restrained. These sorts of mass data statistical approaches have more relevancy towards longer time periods though, and are not great indicators for pinpoint current numerical indicators. There has been 10,000 new programs to analyze price and value that came out lately, but I don’t recall one single program or measurement tool which tracks longer term repurchase and loss measurement against assignment trends for individual appraisers. Would I win if that was the decisive factor? I don’t know, but I’d be willing to stake everything on that. See addenda is for the birds. Automation is a growing problem in this industry, not a solution. As the saying goes; peace sells, but who’s buying?
It is precious to me
Baggs, Our fees are set when the lender (Correspondent or Direct) that orders appraisals negotiates with AMCs for that lenders business well in advance of any specific order. ZERO consideration given to complexity of the specific assignments. Our fee is then LOCKED IN by TRID when the ‘loan officer’ or order taker quotes fees before the loan is ever processed or appraisal is ever ordered. Years ago I recall unlicensed ‘loan officers’ who had only recently stopped their main jobs as strippers near a major airport. Who could possibly be more qualified to determine and quote our fees for us, right?
Ralph-Spot on, but a bit harsh against home owners isn’t it? If we don’t take the time to educate them, then who will?
Zillow is a complete joke. Typical conversation when I’m in John Q public’s home during a re-finance appraisal goes something like this. “Zillow says my home is worth $655,000” I tell Mr Q, in my experience, Zillow is either WAY HIGH, or WAY LOW. Mr Q responds rather angrily “your just saying that because that’s your competition” I inform Mr. Q, that because Zillow is so inaccurate, that’s one of the reasons I remain so busy. Still not convinced, I inform Mr Q that I have an investment property, it’s a 3/1/1 577 sf condo. I tell him Zillow has it’s Zestimate at $200,000, however the most recent sale on the same floor of an identical unit recently sold for $180,000 and while I would love to get $200,000 if I listed for sale, that’s only happening if I get that ONE DUMB CASH BUYER. If Zillow is that far off an a very simple condo valuation, imagine how far off it will be in a single family, where is has no clue on the condition/appeal/location/level of renovations etc. I can go on and on…. But John Q public is not very bright and thinks, I typed an address into Google numbers popped up it must be right! Kind of like those who self diagnose their illness by googling symptoms instead of actually seeing the doctor.
We aren’t voluntarily feeding the AMCs. They were forced on us by law. They were only about 20% of the market before corrupt congress and bankers and wall street *solved* the financial crisis
Across the street from house are two vacant lots. Zillow thinks one of them is worth 16,000 and the other one’s worth 173K. You can see them on the aerial view. https://www.zillow.com/homes/for_sale/33.577449,-112.085951,33.57474,-112.089781_rect/17_zm/1_fr/
Zillow can usually get within a factor of 2, so there are zero significant digits in their estimates, but they always quote down to the exact dollar. It’s hilarious.