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State vs. Zillow.com will be a lengthy bout

This is me in today’s Arizona Republic (permanent link). This goofy little column often “breaks news” in the sense that I cover facts that have not yet been reported by the Republic‘s real estate reporters. Normally I keep this to myself, because I don’t want to frighten the people who were kind enough to give me the column. This week I told my editor that were were “scooping” the newspaper, and gave him resources for vetting the facts presented below. The consequence? At the top of the story is says, “Special to the Republic.” Top that, Hildy Johnson.

(Just between us, I’m pretty sure I’m mangling the citation of the standing law. It’s Chapter 32, not 36, but even then I don’t know how it should be properly cited. Newspapers have style books for stuff like this. This will do: ARS 32-3601 et seq.)

State vs. Zillow.com will be a lengthy bout

The ongoing saga of Arizona vs. Zillow.com will not end.

When the state Board of Appraisal recently revealed that it had sent cease-and-desist letters to the Seattle Web-based real estate start-up in July and November, it failed to disclose that it had language pending in the Arizona Legislature that would have conclusively outlawed Zillow.com and other consumer-oriented Automated Valuation Methods.

That legislation, Senate Bill 1291, seemed to be on an under-the-radar track to easy passage until its existence was discovered by the LittlePinkHouses.com real estate blog.

The proposed language would have substantially revised Arizona Revised Statutes Chapter 36, among other things defining an appraisal as “an opinion of value.”

Does that mean that two neighbors, talking about the price of the house for sale up the street, would be in violation of appraisal law?

What Zillow.com and other AVMs do is so far removed from what an appraiser does that in order to outlaw Zillow, the drafters of the legislation apparently found it necessary to outlaw ordinary free speech altogether.

Importantly, there have been no consumer lawsuits or Board of Appraisal complaints in Arizona against Zillow.com, nor has the Board of Appraisal moved against other consumer-oriented AVMs operating in the state.

A compromise was sought by Rep. Michele Reagan of Scottsdale. She proposed three amendments, one of which would have restored consumer-oriented AVMs to a state of unquestioned legality:

“An Internet website that gives a free opinion as to the value of real estate, if this opinion is not referred to as an appraisal” would have been exempted from the Senate legislation.

But this revised version of the bill did not pass by the necessary two-thirds majority in the House.

In consequence, the existing version of ARS Chapter 36 is still in force.

The Board of Appraisal and the Attorney General’s Office argue that Zillow.com is in violation of the standing law. Zillow.com argues that what it is doing is perfectly lawful. And the website continues to provide its “Zestimates” for Arizona properties.
 
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  • 2 comments

    2 Comments so far

    1. Cathy Jager April 28th, 2007 3:53 am

      In my view, one of the reasons that the Board sought to amend the law is because it’s claims against Zillow are on shaky ground under existing law.

      Existing law distinguishes between “appraisals” and “valuations”. Zestimates (and BPO’s and CMA’s) fall within the definition of “valuation”. Existing law also applies only to appraisals “performed in this state”, which Zestimates are not.

      The amendments supported by the Board would eliminate “valuation” as a separate category, making all estimates of value “appraisals”. They would also try to apply the law to estimates of value made anywhere in the world about Arizona property.

    2. [...] Nowhere in that business model is accuracy. They want to accurate enough that people will go to the site, but that’s about it. The state of Arizona’s lawsuit against Zillow only feeds them more exposure. And I’m a supporter of Zillow’s. I have been from the beginning and I advertise with them. But it’s important that home buyers and sellers realize that Zillow doesn’t know anything about real estate. It’s not a real estate company- and that’s the thing that most people don’t realize. [...]