Attn Fannie Mae: Forget About Appraisals, Let’s Use Zillow

Isn’t it time we all be honest with ourselves?  The real estate industry is f’d.  It’s one of the oldest industries known to man and is one of the most resistant to change.  It’s time we dump the old appraisal model and switch to Zillow.  When Zillow debuted  in 2005 with its Zestimate, it was almost immediately discredited by real estate appraisers and professionals everywhere.  I remember everyone joking about its lack of accuracy.  But much has changes in the last 4 years and the processes and people who were once laughing about Zillow are now the same reason the real estate industry is in total shambles.  The recent Home Value Code of Conduct is still based on art rather than science.  This has the new goal of not influencing appraisers, but how is this better?  If I order 3 appraisals I still get 3 wildly different values.   At best it’s a band-aid on a broken arm.

Last week a lender turned down a client of mine because the appraisal came in at $110,000.  Another lender had it appraised at $156,000.  Worse yet the appraiser lives an hour into Mississippi and is driving to Memphis to do the appraiser when there are hundreds of qualified appraisers to do the job right here in the Memphis area. This is happening everyday in the real estate world.  Some how the Feds thought we could just stop the appraisers from talking to the lenders and introduced HVCC.  This has definitely happened although some appraisers are just forming their own Appraisal Management Companies with their buddies to get around this.   I feel the Feds simply created another level of bureaucracy and loopholes.   Why don’t banks, lenders, and Fannie Mae just start using Zillow?

Zillow is more science than art and that’s just what the real estate industry needs.  Although I own a real estate estate company, and pay dues to the REALTORS, why do I have to sit through another commercial with people pressuring buyers to only use REALTORS?  The real estate economy is f’d right now without some massive improvements.  Zillow could be the just the medicine it needs.   They’ve created an algorithm that is not reliant on human opinion.  It’s reliant on actual existing data.  How they crunch that data to come up with a Zestimate is still up for debate.  A system that crunches more data than any appraiser can personally handle must be more efficient an accurate than the opinion of one person.  I’ve noticed Zestimates being more in line with the middle ground of what these varied appraisers are coming up with.

Now even I have been opposed to Zillow in the past, but as they continue to improve their model, I’d rather my business rely on some scientific computation from some guys that founded Expedia and Hotwire (which changed the entire inefficient travel business),  instead of a bunch of opinions and lobbying.   Plus these guys have no problem digging deeper into discrepancies in their model and personally addressing it.  I’ve received direct responses from COO Spencer Rascoff and Chief Economist Stan Humphries on questions, something that is a total crap shoot when dealing with underwriters at any bank.  Face it real estate needs more science and less art.  The timing of a switch of this magnitude couldn’t be more perfect.  Plus doesn’t it make sense that the Feds do business with the only entity bold enough to put a value on the White House?

If you enjoyed this post, make sure you subscribe to my RSS feed!

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

Tagged as: Appraisal, appraisal issues, hvcc, Zestmate, Zillow