Zillow.com dodges bullet in Arizona: Amendment would permit consumer-oriented automated valuation models to operate without regulatory oversight

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

From a press release from the office of Representative Michele Reagan:

Arizona homeowners can still access their “zestimates” with the preliminary approval Monday of a bill that bars the Arizona Board of Appraisal from torpedoing online businesses that provide property value estimates.

An amendment sponsored by Rep. Michele Reagan to SB1291 allows web sites to offer free opinions regarding the value of real estate if it is not an actual appraisal. The bill impacts most notably Zillow.com, which provides free estimates of a property’s value.

“Companies like Zillow.com provide an easy way to get an idea of the value of a home anywhere in the country,” said Reagan, R-Scottsdale. “Government should not put the kibosh on such an informative online tool.”

The Arizona Board of Appraisal sent two cease and desist letters ordering Zillow.com to stop offering its free service in the state. The board is also considering suing the Seattle-based company despite its wide popularity in Arizona and around the nation. In addition, the board asked the Arizona attorney general to prosecute Zillow.com for offering “zestimates.”

“Zillow.com provides a valuable resource for Arizonans and an unelected board’s desire to hamper consumers’ efforts to get as much information as possible makes no sense,” Reagan, chairwoman of the House Commerce Committee, said. “Instead of protecting Arizonans, the Board of Appraisal wants to stifle access to valuable market information.”

The bill received initial approval Monday and is expected to get a vote on the House floor this week. The bill then goes back to the Senate for final consideration.

This is not over yet, but it’s movement in the right direction. If I can lay hands on it, I’ll post the link to the revised bill and highlight the change.

Further notice: The amendments are here: one, two and three. In addition to allowing for consumer-oriented AVMs, Reagan seems to have restored the balance of civilian oversight of the Arizona Board of Appraisal. For comparison: The proposed legislation prior to these amendments.

There are two changes to the language that stand out:

Page 3, between lines 41 and 42, insert:

“9. 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.”

This creates an exemption in the law for consumer-oriented AVMs, as well as for sites that use pseudo-trading-floor models to predict values. Interestingly, the uninformed neighbors, the boys in the bar and all the idle chatterers will still be in violation of this law as amended.

Next:

Page 26, after line 14, insert:

“Sec. 28. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.”

This means that it will take effect as soon as the Governor signs it, rather than in early June when all the non-emergency bills take effect. I’m reading this as a call-off-your-dogs memo to Arizona Attorney General Terry Goddard. And that much makes me think that Zillow.com may have been involved in the phone calls behind these amendments.

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