Little Pink Houses dug up the smoking gun: The State of Arizona is trying to make it illegal for anyone without a state-issued license to express opinions of value about real property. Oh, there is an exception: You will be able to express an opinion about the value of your own property.
This law, if ratified, is only one court case away from being quashed.
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Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate, real estate marketing
Brian Brady says:
Barry Goldwater is rolling in his grave.
April 18, 2007 — 9:35 pm
James Hsu says:
Am I reading this correctly? Wouldn’t zillow fall into the excluded group (page 3 lines 10-17)? I don’t think Zillow is marketing their tool as an appraisal. A great use of Arizona taxpayer money.
April 18, 2007 — 9:48 pm
Greg Swann says:
No, you’re reading it wrong.
Lines 10-13 provide for real estate licensees to do Broker’s Opinions of Value.
Lines 14-17 permit owners to evaluate their own property — but no other real property.
The implication of lines 14-17 is that free speech among non-licensees about property values is to be outlawed. You can express an uninformed opinion about the value of your own home, but not your neighbors’.
This will not withstand a court challenge — thank god.
April 18, 2007 — 9:58 pm
James Hsu says:
Okay. So the three entities listed in line 14 and 15 is, an individual, an officer of a corporation speaking through the corporation, or a partner speaking through a partnership…
So…if Zillow called it “Richard Barton’s Zestimate” …would that get around this ridiculous proposed law.
April 18, 2007 — 10:05 pm
Greg Swann says:
No, you’re still missing it. Same picture, with highlighting:
Barton will be allowed to evaluate any property he owns, none other.
Here’s the sickest part: The Arizona Republic had to know this was what was behind Friday’s months-late “news.” Why are they trying to cover this up?
April 18, 2007 — 10:15 pm
James Hsu says:
Sorry, … I misread that highlighted part … twice.
I read “that person’s” to be the person you are giving a valuation for. It seems redundant to say a natural person gives an opinion of value of their’s or their own property. Or, …why would someone formally give a value of their own property and what circumstance would an individual giving their own property a valuation ever get compensated for that?…wouldn’t they be paying themselves?
Regardless, …when will they realize how ridiculous they are looking now?
April 18, 2007 — 10:44 pm
James Hsu says:
…they as in the state board of appraisal.
April 18, 2007 — 10:55 pm
Greg Swann says:
> why would someone formally give a value of their own property and what circumstance would an individual giving their own property a valuation ever get compensated for that?
The law acknowledges that by-owner sellers price their own properties, which would be a violation without this exception. It also says that licensed appraisers can price their own for-sale-by-owner properties, provided they don’t take an appraisal fee.
The implication of this exception, though, is that an evaluation by a non-licensee, no matter how casual, badly-informed or inapplicable to any purpose, is “an appraisal” and must be outlawed. If a buyer meets a seller and says, “Your price is too high” — that is a violation of this law.
Obviously, the target is Zillow.com, et alia, not buyers or snoopy neighbors. But they had to write the law this broadly to capture Zillow in the net.
This is a perfect wake-up call about the pernicious evil of occupational licensing laws.
April 18, 2007 — 10:57 pm
John Michailidis says:
Intellectual honesty is in order here — are you trying to argue that two guys in a bar will be banned from giving an opinion of value? Common sense dictates the purpose of the law is to preclude commercial purveyors of opinions of value, not neighbors talking about their neighbors’ properties. It’s that type of hyperbolic nonsense that interferes with serious discussion. I’m not necessarily a fan of licensing laws, but that doesn’t mean I’m in favor of silly arguments against them.
April 18, 2007 — 11:09 pm
Greg Swann says:
> are you trying to argue that two guys in a bar will be banned from giving an opinion of value?
This is what the letter of the law says. The drafters concede that that is what is says by making an exception for the uninformed opinions of value of by-owner sellers.
If you think I’m wrong, show me where in the text. Excluding the parties and circumstances noted in the exceptions provided for in 32-3603, everyone in the world will be forbidden to express opinions of value about real property in Arizona. This is what the words of the legislation say.
Do you dispute this?
April 18, 2007 — 11:16 pm
Cathy Jager says:
Greg is right about the language. “Common sense” dictates that the law won’t be applied to the guys in the bar. However, “common sense” application at the discretion of the Board is a very big problem, Constitutionally speaking…..
April 19, 2007 — 6:08 am
Jonathan Dalton says:
What’s the bill number, Greg?
April 19, 2007 — 8:08 am
Greg Swann says:
> What’s the bill number, Greg?
AZ SB 1291. The text is in the PDF link above. Passed the Senate, it’s been through two of three readings in the House. It’s a super-majority bill.
April 19, 2007 — 8:11 am
Brian Brady says:
For the sake of discussion, Greg, here is what I believe will be the response from the legislators:
We’re not outlawing two neighbors from talking at Starbucks about home prices nor are we suggesting that a guy at the corner of the bar at Majerle’s can’t pontificate about his neighbor’s overpriced listing.
The behavior we’re trying to regulate is the unlicensed PUBLIC opinion of price inasmuch as it is a function of commerce.
In short, two guys can argue price at Majerle’s Sports Bar but the moment they “post” that address on the chalk board on the wall and solicit commentary from the patrons, they are in violation of the law.
I’m jumping in for the academic discussion. This law is ludicrous. Arizona is desperately trying to become Florida when they pursue this protectionist agenda rather than living in the frontier spirit that made the state great.
April 19, 2007 — 8:13 am
Greg Swann says:
I agree, Brian, that that’s the spin they’ll try to put on it. Moreover, I’m sure the Ninth Circuit will shoot this down, with respect to Zillow, as an attempt to regulate interstate commerce (a whole other can of worms). Even so, I can think of a lot of reasons to denounce this kind of anti-market legislation.
April 19, 2007 — 8:26 am
Brian Brady says:
“Even so, I can think of a lot of reasons to denounce this kind of anti-market legislation”
It’s the onset of fascism in Arizona. Legislate the right of opinion to an exclusive group so that the opinion is in concert with the State.
Hinting that we’ll see the appraisers marching down Central Avenue in the Fiesta Bowl parade is a bit sensationalist…or is it?
April 19, 2007 — 8:38 am
Greg Swann says:
“You may love that home across the street — but, by law, you cannot put a price on love…”
April 19, 2007 — 8:51 am
Lee Trice says:
Greg –
In response to your hypothetical about “two guys in a bar”…other States with such laws will often include a proviso that the Opinion of Value is provided for a fee.
In the case of Zillow et al, one could argue the Opinions are free…or one could argue the Opinions are provided to facilitate adverstising or other fees.
Food for thought.
April 19, 2007 — 9:10 am
Greg Swann says:
> other States with such laws will often include a proviso that the Opinion of Value is provided for a fee.
And that part is missing from Arizona’s appraiser licensing laws, both the standing text and this proposed revision.
No reasonable person could doubt that an appraisal is a contracted work for hire done in the expectation of quid pro quo compensation. This standard cannot possibly be applied to Zillow.com and other Realty.bots.
April 19, 2007 — 9:16 am
Brian Brady says:
Here’s the funny wrinkle in the rotarian socialist’s plan:
http://159.87.254.2/publicdatabase/DetailEntity.aspx?Id=27181
They’re already in the club
April 19, 2007 — 11:30 am
Mike Thoman says:
> They’re already in the club
Brian, depsite the license, I don’t think Zillow could prove, in all instances, that the zestimate/appraisal was ‘for the purpose of prospective listing or sale.’
I think it’s funny that since an appraisal is also defined as ‘THE ACT OR PROCESS OF DEVELOPING AN OPINION OF VALUE,’ I’m not even allowed to take steps to form an opinion. What if I want to personally verify the opinion of value Greg gave me of a house I’m buying through him? 🙂
Mike
April 19, 2007 — 12:05 pm
Greg Swann says:
> What if I want to personally verify the opinion of value Greg gave me of a house I’m buying through him?
You can have any opinion you want, as long as it’s mine. 😉 Oh, wait: You can also hire an appraiser for $350 bucks.
I wonder how many states Gary Rudlaff is licensed in.
In any case, a Zestimate surely does not exist ‘for the purpose of prospective listing or sale.’ Someone would have to request it for that to be so, and Zestimates are unsolicited opinions of value.
April 19, 2007 — 12:13 pm
shaun mclane says:
Shouldn’t this also effect mortgage brokers? Don’t they have to determine a value to estabish an approval amount? Do all AZ mortgage brokers hold an appraisers license also. Doubt that very much.
April 19, 2007 — 1:37 pm
Brian Brady says:
Industry opinion of the “good” the AZBoA is doing:
http://activerain.com/blogsview/75759/Zillow-Ordered-to-Cease
April 19, 2007 — 2:14 pm
Jay Thompson says:
The level of applause FOR the AZBoA in that ActiveRain thread is deafening.
And I find that quite disturbing.
Quotes from ActiveRain:
“I’m all for sticking it to that Z site”
“Good news as far as I’m concerned.”
“This is a fantastic response in Arizona”
“I hope this does catch on with other state”
“I think this is great news for the folks in Arizona.” “No more random guesstamits on homes!!!”:
“Thats great news for Arizona realtors.”
“It’s about time something was done about Zillow’s off-base “zestimates.”
“Zillow needs to be state supervised!”
Good Lord. The number of people that just don’t get it is staggering.
April 19, 2007 — 4:41 pm
shaun mclane says:
ugh…My eyes are bleeding. Note to Realtors – WAKE UP! We as a group need to advance about 10 years, and we need to do it by tomorrow. As crazy as the market is, and as fast as the web moves, what makes you think for a second your little bubble of protection you call the MLS is going to always be there? Figure out how to make Zillow work for you and run with it. Stop crying about it. You need to figure it out, because I promise you, your clients already have.
Let the flaming begin.
April 19, 2007 — 5:01 pm
John Michailidis says:
>Do you dispute this?
I dispute your opinion of the way the written law will be enforced. How’s this — if two guys in a bar ever get fined, imprisoned, shot, hanged, bull-whipped, teased, or persecuted for pontificating on their opinion of their neighbor’s house’s value I’ll give you $100. I put it out to the world — let’s see what happens.
April 19, 2007 — 10:32 pm
Greg Swann says:
> I dispute your opinion of the way the written law will be enforced.
I did not say it would be enforced that way. What I said was:
In other words, the drafters know that Zestimates are as harmless as idle chatter, but the only way they could outlaw Zillow.com was by writing a law that could be applied to idle chatter. This is bad law but an ideal demonstration of the pernicious evil of occupational licensing laws.
April 19, 2007 — 10:38 pm
Cathy Jager says:
John,
I’m really surprised that, as a lawyer, you don’t see a problem with a law – particularly one with potential criminal penalties – that is ok or not ok depending upon how it is enforced.
Note in this regard the new bill about to be passed by the AZ legislature would reduce the number of public (non-appraiser) members of the Appraisal Board from 4 to 3.
Yup. Let’s give the self-interested members a solid voting block and more discretion.
Maybe we should do the same thing for investment and financial advisors – fill a board with licensed advisors and stock brokers, let them determine what constitutes investment and financial advice and enforce it when they want against whom they choose.
Do you like that idea because it won’t be applied to two guys in a bar?
April 20, 2007 — 3:14 am
Mike Bliss says:
I don’t live in AZ. All I can imagine is that the politicos actually think they are doing good. The misguided fools believe they are protecting homebuyers from predatory loans and probably believe that this law will singlehandedly help to ease the current regional correction.
Regarding Zillow…wow…anyone with more than a grade skool[sic] education couldn’t possibly believe Zillow is the place to go to get a fair and accurate estimate. I use Zillow only to find out what previous owners actually paid for their homes and this is only for my own amusement.
This new law will be struck down with the first court challenge it encounters. What a waste of AZ taxpayers dollars.
April 20, 2007 — 6:26 am
John Michailidis says:
My dear friends Cathy and Greg — I forgive you for not reading what I actually said, so I’ll quote: “I’m not necessarily a fan of licensing laws, but that doesn’t mean I’m in favor of silly arguments against them.” In other words, I think the law is dumb, but I also think that sensationalizing the point with hyperbole is also dumb. Sensationalist arguments are what people use when they are not confident that the facts will stand on their own. This is why I NEVER believe ANYTHING out of the mouth of a politician (pure lies), or a lawyer arguing a case (pure spin)– they skew the truth with hype. It pained me to see Greg using this same approach. I’m sorry I mentioned it.
April 20, 2007 — 10:16 pm
Greg Swann says:
> It pained me to see Greg using this same approach.
In the weblog world, we quote, we don’t characterize. My arguments against occupational licensing laws are extensive. If you want to take them on, go for it. If you want to beat up on straw men, you’re sure to impress yourself.
April 20, 2007 — 10:31 pm