Arizona Appraisers vs. Zillow

In my research with Chad Syverson on real estate agents, which is also discussed in Freakonomics, we argue that the current system doesn’t do a great job of aligning the interests of the agent and the homeowner. Consequently, you may not want to believe what your real estate agent tells you.

So how else are you going to figure out the value of your home? One sensible idea is to have an appraiser come and value your home before you put it on the market. Just about nobody does this, which seems strange. The following story might give you a hint as to why so few people put their trust in appraisers.

I bought my current house from someone I knew at the University of Chicago. We agreed in principle that I would buy his house before we ever talked price. We were friends. We needed some reasonable way to figure out the value of the home. We decided to bring in three appraisers, explain to them we wanted to know the true market value of the home, and take the median of their estimates as the sale price. We were surprised to find that most of the appraisers simply wouldn’t give us an appraisal. Apparently, it wasn’t their job to tell us the value of the home, it was their job to determine whether the price that a buyer and seller agreed upon was a reasonable price. I had a hard time understanding this distinction, but they wouldn’t even come out to the house.

We finally managed to get one appraiser to show up. He seemed very nervous about the task at hand. He repeatedly asked whether the buyer or the seller was paying for the appraisal. When we said we were each paying half, his anxiety increased further. Even as he looked at the home, he was making excuses about how he could not come up with a fair market value. We were so unnerved by his demeanor (and also were having so much trouble rounding up three appraisers to come out to the house) that we scrapped the whole plan and just settled on a price the old fashioned way.

Maybe I’m missing something, but it seems like appraisers have made themselves little more than a necessary and costly evil in the current home-selling routine. How did this come to pass? If an appraiser could really tell you what to list your home at before you put it on the market, just about everyone would want their services. There is no reason at all that a real estate agent should be better at knowing the value of a home than an appraiser — if they were, then the banks should ask real estate agents to say whether a price is fair! Yet, real estate agents are far more influential in determining listing prices.

Especially as the real estate market transforms with fewer homes sold via full-service real estate agents, there will be a growing unfilled niche for people who can value homes, whether that turns out to be appraisers or someone else. If I were an appraiser, I’d be trying to make sure it was me who filled that niche. is one player trying to play that role. Using publicly available data, they have a quantitative model that tries to predict the value of a home. Appraisers, however, are not taking kindly to this. Recently, for instance, the Arizona Board of Appraisal tried to ban Zillow from giving their price estimates in the state. Maybe Arizona appraisers should just try to provide a service better than Zillow instead. (Of course, it is hard to match Zillow’s price — it is free.) In defense of the Arizona Board, one of their arguments is that Zillow’s estimates are inaccurate and misleading. I certainly hope that they are right on this count, because when I Zillow my own house, the value it computes is only about 60 percent of what I think it is worth, and much less than what I paid!

Maybe I should have had those three appraisers come out after all.

(Hat tip to Dan Dawson.)


Note that none of the appraisers that have commented here has yet addressed the fact that the data that they need is owned by the real estate industry and that they don't have free and easy access to it!

So how in the heck can you do your job without the data of previous sales?


I'm not an appraiser, nor am I an MLS subscriber, but I'd like to address the concern above.

Appraisers can subscribe to these databases, just like real estate brokers can. So that takes care of the "easy". As to the "free", someone decided to spend time & effort creating a product (a fairly comprehensive database), and that product is in heavy demand. I see no reason why they can't charge an access fee.

If your job is valuing properties, and there's a service you can subscribe to that will provide the very data you need to do that, sounds like that subscription is just a cost of doing business.


We got widely differing apprasials on our expanded cape in North Jersey. One realitor said he couldn't price it because he never saw a house like ours! We used Zillow to look up the appraised prices in our town and found that houses were advertised at an average of 55% above appraisal in our town. We tracked this regularly and made sure we were 6%-8% below this, keeping in mind according to the houses sold circulars the dated sales prices averaged 40% above the four year old appraisal. We sold the house for 32% above appraisal and despite hundreds of realitor calls, sold it ourselves.


No ThisManMustBeStopped, I have no problem with data being owned by private companies that produce the data. BUT if that data is used in a public way to set the taxes of the public, then that data should be freely available so that you may protest your taxes.

There is no law, in Texas, that you must declare the sales price of a home to the appraisal districts. Therefore they must use private data such as MLS. Now this is the important part...they get that data unfiltered so that they can do statistical analysis and value your home.

But you, John Q. Public, must rely on math illiterate real estate and private appraisers to give you a magic number. No thanks.

One side note, doesn't private data that is used by a public governmental entity such as an appraisal district to set public rates become public data? So why isn't all MLS data in Texas in the public domain? Any lawyers out there?



It's probably best, or at least safest, to think of Zillow as a very early-stage technology. It's neat to look at, and I imagine that's the appeal for advertisers and investors. But really it's not very useful, though I certainly wish it was.

It'll get shaken and stirred and competitors will appear. Five years from now, this kind of thing will be worth paying a few bucks for. Wait and see.

kentavos is not accurate because they are relying on public record data. Public record data varies in quality, accessibility, and format across the country.

In states like California that data can be very accurate and standardized while in Oklahoma, not so much. This allows for accurate zestimates in California as opposed to Oklahoma.

I highly doubt that they are using any appraisal data in creating their scores. Lenders are notoriously stingy with their appraisal data (as are appraisers) and the process of getting that data is complicated and expensive.

They may have some access to MLS data, but much like public record data, it's non standardized and usually very localized. This means accessing the data would be expensive and very time consuming.


ThisMan is correct in response to egretman. Most appraisers pay for access to their local MLS data to locate comparables. It's not cheap, but it's available and considered a tool to get their job done. If the property is unique enough or has no real comps, they can take a cost approach, as described by ThisMan. This is all part of the standard appraisal process and is what is taught when an appraiser is in training.


I'm not sure why the appraisers were afraid to value your house, unless they were afraid of lender backlash and complications.

Appraisers often perform appraisals even though there is no intent to sell the home. A good example is divorce appraisals, where an unhappy couple needs to determine the value of the house so they can decide who gets the 401k.

Another example would be PMI deduction, or a valuation to verify that the ltv is 80% and PMI can be removed.

However, if you were going to sell the home in the near future, then ordering an appraisal before talking to a bank can be problematic.

A lender is federally prohibted from using an appraisal from a borrower to give out a loan. If you ordered an appraisal, walked into a bank and said I want a loan for this amount, they would have to order another appraisal.

This is usually extremely frustrating for both the borrower, who has to pay for a second appraisal, and the loan officer, who has to explain everything.

In addition, if the lender is good, they will order an appraisal from a different appraiser and will not provide an owner's estimate of value or a purchase price. This means the second appraisal could come in below the value of the first. This further enrages the borrower and complicates the loan officer's life.

If the loan officer is mad enough, he could easily decide to no longer use the original appraiser.

That's the only reasonable explanation I could think of.



Hi, it's David from Zillow,

Steven -

Great story - there does seem to be a gap in the market for the service you needed. Maybe an enterprising RE agent will step up to fill this need. When you're estimating the value of a home for the purpose of selling it in the open market, it's typically a real estate agent you need, not an appraiser. My understanding is that appraisers don't pay as much attention to the impact on pricing of supply and demand as what real estate agents do. I'd like to know whether the agents and appraisers here agree with that?

I'd be happy to take a look at why your house's Zestimate is off if you'd like (e-mail me). The most common culprit for a big variance like that is incomplete or even incorrect public records.

You can publish a revised estimate of your home's value on Zillow (click on "My Estimator" to get started.) The Zestimate value is not intended to replace the opinion of a local expert who has visited the home.

jedberg -

That's kind of the point -- Zillow is definitely not offering an appraisal. Zestimates are a starting point for researching house values, not the final word. I've actually spoken with homeowners whose Zestimate prompted them to get an appraisal. We have appraisers advertising on our site (please tell your Mom about that -

Terry Lee -

When we don't receive your home's parcel co-ordinates in the public record, we estimate its location (hence the blue diamond in your driveway on Zillow). When you do come to post it For Sale or add a Make Me Move price to your house on Zillow, you are given the opportunity to drag it to the correct location on the map. We're constantly working on getting more parcel data across the country.

moneybroker -

FYI - you can now post your listings (for free) on Zillow. In the "My Estimator" example you cited, you need to go all the way through the process to the 4th step and pick good comps before the revised estimate will make sense. That said, I'm not sure you'd find a comp that's a 0/7 though ;-)

chen -

Here's a great way to introduce your services to the Zillow community of homeowners:



One small point I'd like to make is that appraiser's customers are banks and real estate agents, not home buyers and sellers. It's kind of like if I walk into a machine shop wanting them to make me a can opener. Sure, they can do it, but they normally service businesses and here is some guy wanting a can opener. It's not what they normally do even though they technically can do it.

As for the idea of institutionalized graft, you certainly get that feeling if you go through a few closings.

Zillow is fun but if I should mention the new Google Real Estate service. That is pretty wild. As either a home buyer or seller it is quite easy to research comparable home prices that are *currently* on the market (for sale, not recently closed). As Google expands this service don't be surprised to see Zillow's type of data incorporated.


The appraisal filed is condusive to entry by inexperienced, incompetent and unethical practitioners, despite licensure laws. (Governing bodies and the qualified are busy minimizing their numbers, but they appear to remain the majority.) Those who would not give a value without a predetermined price were some of the appeasers which have infiltrated the industry. They did a favor in turning down the assignment, as thier analysis would not be worth the paper it is written on.

Try the American Institute of Real Estate Apprisers' web site for designated appraisers by locale. These folks have demonstated experience and qualifications to their piers and hold themselves to an additional level of professional sanctioning.

Users should take note of the applicable definition of value (market value, probable price, liquidatiton value, etc.) and recognize an appraisal is time sensitive - particularily in today's moving markets, and understand values tend to fall within a range. This is why a pending sale price is often reaffimed by an appraisal as it falls within a reasonable range and results from conditions requisite to value... open maketing on cash equivalent term with no duress.


David N.

Zestimates are useless in my area. The values given are exactly the values from the last tax assessment. It would be easy for Zillow to make these numbers more accurate; determine an average premium/discout multiple to assest values based on proximate recent sale data, then multiply assesed value by that factor. In my part of New Jersey the factor is approximately 1.5. To whatever extent the assesed values capture variations in quality, this information would be preserved, but scaled to come closer to actual sale prices.

David from Zillow, feel free to pay me for this idea. I'll let you know where to send the check ;-)


I live in Arizona. I Zillowed my house a few times over the past two years and they have never even come close to what I think my house is worth. The first time I checked was in the boom of 2005. My house was purchased for 185k in 2003. Zillow told me my house was worth 358k in 2005. Um, no it wasn't.

Recently Zillow lowered the estimate to a modest 325k. No, still too high, even for Arizona. Comps in my neighborhood are selling for around $265k, give or take depending on how nice your yard is and if you have a pool.

Zillow's numbers are not based in reality, at least they aren't for Arizona.


They may have some access to MLS data, but much like public record data, it's non standardized and usually very localized. This means accessing the data would be expensive and very time consuming.

Yes Kentavos, that's exactly right. MLS is set up to list and sell your house now. It's not set up to compare comps and to appraise homes.

Therefore, appraisals are art not science. The data is not there in organized form of every house with it's comparables. You have to pay some numnut to search through the data trying to find comparables. That's the art of it.

Now, if you will go to someone who has done the work for you, such as the appraisal district in Texas, you can get the data for your house that they use for the appraisal. And these people are professional statisticians. Dr. Levitt would like them.

But they do not like to give it out for homes that you are thinking about buying. You can trick them by saying that it is your home on the phone and that you want to pick up the data so that it's not mailed to the home address.

This is all what I mean when I say. There is no data!



Now here's the real question. Since the appraisal district is a public entity. And they have all the data, in nice organized form, for every house in Texas. Why isn't the data public if it is used to tax your house?

And more to point of Dr. Levitt, why can't private appraisers just access this huge warehouse of organised, certified data on every house in Texas? And why can't Zillow index and display it?


Texas appraisal district data is a county-by-county affair. Some have great web sites with easy access to data; others don't.

Here is a link to the assessor's page on Mark Cuban's house.


Egretman, I am unclear about something. Are you saying that Texas public records do not include basic details like square footage of each house, the acreage of the land, and year of initial construction? Certainly you would expect that much given assessment data. Also, I assume they include every purchase price and date? I know that not every State includes mortgage data, although many do. But, with size/land/age/last-price, you have at least a statistical comparable for nearby homes that have sold recently (so it takes into account market information and remodeling). Are you saying that you do not have access to this basic information?


Zillow will not deliver an appraisal report. It will deliver a value estimate based on public information. That works fine in a cookie cutter community in a state that has full disclosure. It won't work on a house built 100 years ago in Texas. Texas is a non-disclosure state. Secondly, any appraiser who considers him/her self a professional will subscribe to an MLS. The appraiser that came to the house you wanted to purchase is a flake, but I suspect you stretched the truth a bit. Many unprofessional residential appraisers have been in the business only a few years and were poorly trained. If they have primarily completed appraisals for mortgage loan purposes they are no better than form fillers and I suspect that is the kind of appraiser you hired. Sounds like you have two problems here: an unqualified appraiser was hired and you didn't properly screen him. I've been appraising since 1979 and although I no longer appraise properties for mortgage loan purposes, when I did I never sought to "hit a number". I've lost more mortgage broker clients in my life than I can count for the simple reason that mortgage brokers and real estate agents generally only want appraisers who can make a number. The majority of appraisers are professionals doing a competant job. A few are not. Finally, you should be aware that a real estate salesmen license is fairly easy to get and reguires no training prior to licensure. However, an appraiser trainee must undergo months as a license trainee prior to being eligible to sit for a residential appraiser license exam. As an aside a recent Harris poll indicated the general public rates real estate agents as one of the least trustworthy professional categories. The survey can be found at If you had a bad experience with a dentist would you slam the profession, buy your own dentist tools and work on your own teeth?



Yes pkimelma, info about every house is generally complete and published on the web. But, and this is the kicker, not which houses are it's comps and what they sold for. It's not published on the web site. Why? Well, it would expose all of MLS's past listings and their sales data to the general public. MLS would lose it's data.

But all that MLS data is used for the purpose of public taxation. So as an individual protesting your tax evaluation, you already have a legal right to that data for your home. And indeed you can go down and get it in any Texas county. Now this is professionally maintained data year after year. The kind Dr. Levitt drools for. For instance, a house in a city in Texas could quite well have 600+ comps. And maybe 5% would have sold. That's 30 homes that you and the district can use to argue over. In a slow market, it's not unusual to still have at least 12 or so.

But if you are Dr. Levitt and want to buy a house, all that work that the appraisal district has already done is not available to you or your appraiser. The poor appraiser has to go digging around in the MLS again for his 3 comparable houses. It's just art. It's not really a professional job with the time to devote to it. Trust me it's not.

Now here is my question for a good attorney. Since a public entity has already paid for and compiled the data and used it for an official public good (taxation), isn't all of it already in the public domain?

In any case, I can easily see a day when this data is freed and the internets and some simple data mining will make 1% real estate commissions the norm. But I'm sure everyone can see that.



There are several kinds of Real Estate Appraisers. Because they engage in a segmented marketplace, they may not always realize it. Particularly people who just work on behalf of mortgage lenders. If I were to do what you wanted, I would only use a SRPA who did a lot of single family work for probate. In general, it is a retrospective estimate and very comfortable. You guys were out on the edge of normal practice. The state licensing laws were a reaction to the Reagan S&L debacle. The banks wanted the legislators to think it was the fault of appraisers, not their naive greed at invading a marketplace in which they had no expertise. Consequently the licensing requirements are kind of a "So what?" statement. Don't forget an appraisal is just an educated opinion and you can still do what you want. Real estate sales people engage in predicting the future market, balancing asking price against time on the market. Finally, the recent appreciation is enough to make Nostradamus hedge his bets.



In a (possibly futile) attempt to defend my profession, I would note to mdvlrpa that in Texas, a real estate salesperson must complete 210 classroom hours of real estate education prior to licensing, and no experience is necessary. A real estate broker must complete a total of 900 classroom hours of education, and have 2 years' experience. Both licenses also involve passing an exam.

Requirements admittedly vary from state to state, but I would compare this to the 75 hours required to obtain an appraiser trainee license (with an exam but no experience required), and the 180 classroom hours required for a Certified General appraiser license (with and exam and 2.5 years experience required).


Egretman, the idea of a comparable house is subjective at best. Appraisers look for nearby houses that have sold in the last 6 months and then try to determine which are closest in size/quality/view/land/etc. But that "try to determine" is not objective. So, I am not sure what you mean when you say they do not publish the comparable houses. I think you mean that the assessors do not publish what *they* used to determine your house value? In that case, I agree that there is high risk when they are hiding the information they used to value your home. You can hardly challenge their data when you do not know what it is. On the other hand, you can usually show market trends for the general size/quality and ballpark price of your house (mobile homes go down in value much faster than custom built homes for example; $2 million homes change less readily than condos; etc). But, this issue of the Texas assessment district (for prop tax) is different than what affects Zillow, I think.