n.b. Zillow gets a black mark for not being accessible via the Safari browser; it requires either Internet Explorer or Firefox. That is a stupid marketing decision, like telling your customers that they have to wear pink underwear or they cannot look at the items for sale in your store. Grumble, grumble.
What's a Zestimate?TM
The ZestimateTM (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The ZestimateTM is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. Variations in price also occur because of negotiating factors, closing costs, and timing of closing. 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)
- Creating their own estimate using the My Estimator home valuation tool
Is a ZestimateTM an appraisal?
The ZestimateTM is not an appraisal and you won't be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is an estimate of the worth of a house today, given the data we have available. Zillow.com does not offer the ZestimateTM as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the ZestimateTM is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for, such as entertaining offers, negotiating, closing costs, timing, etc.
Can I use the ZestimateTM to get a loan?
No, you can't. To get a federally guaranteed loan, a law called FIRREA (the Federal Institutions Reform, Recovery and Enforcement Act) requires an appraisal from a professional appraiser. The ZestimateTM is our estimate of fair market value, a starting point for home buyers and sellers and anyone just plain interested in the value of houses. You can use it in negotiating, in judging market trends, and in calculating all sorts of things for your personal purposes. But, if you needed a loan or help in understanding the ins and outs of financing, please visit our Finance section.
Next, we need to look at some USPAP definitions. USPAP is federal law by virtue of Congressional mandate. To quote from the Appraisal Standards Board, "The Financial Institutions Reform Recovery and Enforcement Act (FIRREA) of 1989 cites USPAP as the standard to be enforced by state real estate appraiser licensing and certification boards." (note that Zillow has mislabeled the acronym) How does federal law define an appraisal and an appraiser? The DEFINITIONS section of USPAP states,
APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.
Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).
APPRAISER: one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.
Comment: Such expectation occurs when individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply. (See PREAMBLE.)
The ASB's Advisory Opinion 21 outlines when USPAP should apply.
My opinion : the Arizona legislature has a hidden agenda. As a certified appraiser, I issue an appraisal any time I utter the words, "I think that (insert whatever real property) is worth (insert whatever price)." I upset people when I refuse to tell them, off the cuff, what I think their house is worth.
Zillow is clearly disclaiming that what they are doing is not to be considered an appraisal. What they are doing is no different from any attorney, accountant, or real estate agent offering a market analysis or value opinion ("related functions" of the appraisal process) regarding a home.
Somebody in Arizona has been out in the sun too long. Attempting to redefine an appraisal in a way different from federal law could have some unintended consequences and unfortunate implications for the ordinary citizen.
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