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Real estate appraisers decry Zoocasa calculator

The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.

Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.

Read the story in the Globe and Mail

But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.

“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.

Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.

“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”

Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.

Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.

“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”

While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.

“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”

Zoocasa pries open property data vault

Real estate information that was once almost impossible to get without the help of an agent is now available online, in yet another sign that the business of selling homes is rapidly changing.

Carefully guarded data on home appraisal values – once the private preserve of real-estate industry insiders – has been posted by a listings website backed by Rogers Communications Inc., which has tapped private databases to give people an instant estimate of a property’s value.

Read the story in the Globe and Mail

The move is significant for buyers and sellers from coast to coast because it is another step in weakening the position of real estate agents, who have long used their privileged access to data about local housing markets as a tool for getting customers – and for justifying commissions that usually cost about 5 per cent of the value of a home.

Last year, the federal Competition Commissioner Melanie Aitken loosened the grip of property agents on home sellers by taking on a case against the Canadian Real Estate Association, arguing that restrictive rules for using the Multiple Listing Service, through which most homes in Canada are sold, were anti-competitive.

The two sides eventually settled the case after CREA agreed to make it easier for sellers to list their homes on that website without using an agent through the entire sales process and paying a full commission.

Now Zoocasa.com has partnered with property valuation company Centract Settlement Services to make local market information available to anyone with a Web connection. By entering any address in the country and providing a few additional details, such as the number of bedrooms and bathrooms in a house, a user can get an instant price estimate. It can give them a better idea of what their own house is worth – or something to gossip about around the dinner table as they discuss the net worth of friends, family members and neighbours.

“That’s one of the fun things about this service,” says Butch Langlois, president of Zoocasa. “It’s not necessarily your own home that you are interested in pricing.”

The service is the latest assault on the traditional real estate model, which has often kept information in the hands of agents to ensure they are an integral part of any sale. As the Internet catches up with the industry, more and more services are being offered individually by smaller companies looking to fill niches.

“Hoarding data has been a crutch that has hurt agents,” Mr. Langlois said. “It’s a commodity and they have treated it as though it were not. And that has taken the focus away from their more valuable services.”

The industry has opened up considerably since the Competition Commissioner’s case. The decision caused a proliferation of flat-fee agents, who will post a house on the MLS site and then leave the consumer to handle the rest of the sale on her own, rather than pay a commission to be guided through the entire process.

As the industry evolves, a new host of à la carte services such as Zoocasa’s appraisal site are popping up to help consumers with specific portions of a deal. The service, which Zoocasa has coined a Zoopraisal, is modelled on similar features offered by American websites such asZillow.com.

Zoocasa doesn’t charge for the appraisals – it makes its money by charging real estate agents fees to have their ads pop up along with the data. The business is a portfolio company of Rogers Ventures, the business development arm of Rogers Communications.

Mr. Langlois said his site’s estimates aren’t perfect – they don’t take into account improvements such as granite countertops, for example – but they will continue to improve as the service evolves. He also believes the information will ultimately drive business to the country’s real estate agents, as consumers make faster decisions based on better information.

The estimates are based on data collected by Centract, an appraisal company owned by Brookfield Residential Property Services that has inspected more than 4 million Canadian homes on behalf of banks and other financial services companies in need of valuation data before writing mortgages.

“This information isn’t meant to replace a professional appraiser by any means,” said Rob Soja, vice-president of business development at Centract. “But it’s a pretty fun tool that can give people a pretty good idea of a property’s value.”

While Mr. Langlois said he’s been surprised by the generally warm reception the service has received from agents since quietly launching last week, there are some who feel the site could give homeowners an inflated sense of worth.

“Homes that are priced too high to start have a good chance of selling for less than they would have if it had been priced right in the first place,” said Sara Hamilton, a Century 21 agent in Unionville, Ont. “It also encourages people to not have adequate representation, which can make them more susceptible to being taken advantage of by a buyer looking for a deal.”