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Zaio Coming to GA! Good or Bad for Appraisers?
February 1, 2007

Depending on your perspective and if the plan works, Zaio could be a way to lock-in appraisal assignments by the thousands or it could be a plan that would severely restrict an appraiser's ability to compete for business geographically. Zaio is in the process of pre-appraising all houses in the 250 largest urban centers across America. Georgia's metropolitan areas are on Zaio's agenda for 2007.

Zaio is a Canadian public company formed in February of 2004 with an ambitious project. Zaio is in the process of photographing entire cities, one building at a time. The photos will be part of a database that will also include tax assessor information for each property. The database will also receive appraiser input from local appraisers that is anticipated to increase the accuracy of the data.

The goal is to make the majority of real estate appraisals faster and less expensive. To compile the database, Zaio, acronym for Zone Appraisal and Imaging Operations, is hiring photographers and appraiser across the country. To encourage appraiser participation, Zaio is offering appraisers the opportunity to purchase a "zone" of 10,000 houses.

Each zone will cost the appraiser $9,000 and along with the purchase, the appraiser will get exclusive use of Zaio's technology, use of the database, and revenues from all valuation products sold in the appraiser's zone.

The appraiser's role will be to make an initial "scoring" of each of the 10,000 houses - grouping them by market segment. The scoring will be the result of a review of the properties using the digital photos in the Zaio system, followed by an exterior inspection of each property. Zaio estimates that the initial scoring will take about a month for each zone.

After the initial scoring and market segments have been identified, the appraiser will identify three comparables per segment - with an expected 50 segments per zone. In addition to annual reviews of the market segments, each appraiser will monitor sales in his/her zone and update comparables for each market segment on a monthly basis.

All of this preparation is done in advance of appraisals being requested by the user. The idea is that the properties in each zone have all been pre-appraised. Therefore, when an appraisal is ordered, Zaio will be able to generate a report without further involvement of the appraiser - complete with the appraiser's signature.

For the most part, it is expected that the resulting appraisal product will be the exterior 2055-style report. Zaio estimates that on average, each zone should receive 20 such requests per month or a total of 240 per year. Zaio anticipates fees of $100 to $200 per assignment of which the appraiser will receive 44% (59% if the appraiser referred the appraisal order).

Here are some things for appraisers to consider before they jump aboard. Assuming that the company estimates are correct for the number of appraisals ordered from each zone, the income to be derived from appraisals from a zone will fall somewhere in the range of $10,560 per year to a maximum of $28,320 per year if the appraiser referred the business and the appraisal fee was $200.00. That may not be much of an incentive to help build the Zaio database, monitor and continuously update the database, while forking out $9,000 per zone for the privilege of doing so.

Appraisers should also consider that if the venture is successful, each appraiser will have purchased their territory and simultaneously locked themselves out of doing business in neighboring zones. In effect, each appraiser will be limited in assignment territory to his or her own zone. That is an outcome that few appraisers are likely to anticipate.

Zaio made its first presentation in Atlanta in January. Apparently 75 people had reserved space at the presentation, however, less than 20 showed up. According to Brad Stinson, VP of Business Development, that is about normal for the first presentation. Sales of local zones usually start off slow and build to a fever pitch as the number of remaining zones dwindles.

For more information about Zaio's plans for Georgia and nationwide, check out Zaio's website at http://zaio.com or send an email to info@zaio.com.

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