June 22, 2007: Arizona state rethinks crackdown on online home appraisals

The move by the Arizona Board of Appraisal and Attorney General Terry Goddard to prosecute Zillow.com, and potentially other Internet-based home valuation services, may be at an end.

Last June and November, the board ordered Zillow to cease and desist offering its free "Zestimates" in Arizona. The Attorney General's Office followed up with a letter of its own, threatening prosecution. No other Automated Valuation Model was targeted.

Arizona Senate Bill 1291 was drafted earlier this year to fortify the board's argument, redefining "appraisal" to mean any opinion of value, not just a paid evaluation contracted from a professional appraiser.

Rep. Michelle Reagan initiated the process of amending the legislation to permit AVMs to operate in Arizona. Her amended version passed the House and was subsequently further amended in a joint House-Senate conference committee.

The Senate voted Monday night to approve the amended version of SB 1291. Among the amendments was an exemption for free Web-based AVMs from regulation under the state's appraiser licensing laws. The House approved the amended language Tuesday.

As the Web site LittlePinkHouses.com notes, the amendments also undid other changes that had been sought in the bill. The composition of the Board of Appraisal will not be changed to include a majority of professional appraisers and the legal definition of an appraisal will conform to a common-sense understanding of the term.

As originally drafted, the bill would have outlawed virtually any estimation of value, possibly even including the casual conversations of neighbors. This is the amended definition of an appraisal:

"A person who produces a statement that is provided to any other person concerning the estimated value of real property through an Internet Website, automated valuation or other software program or other means of comparative market analysis and who discloses that the estimate is not an appraisal."

This language absolves not just Zillow but also real estate licensees producing Broker Price Opinions for lenders and, presumably, other methods of evaluating homes.

The amended bill awaits only the signature of Gov. Janet Napalitano to become law.


Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.

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