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Phoenix—Should online computers need a government-issued license to estimate the value of a home?  As ridiculous as this sounds, that is essentially what the Arizona Board of Appraisals is demanding with two cease-and-desist letters it issued last week against a popular website that provides visitors with an estimate of home prices based on a mathematical formula.

The website, Zillow, allows individuals to estimate the worth of homes through its “Zestimates” program that produces an estimated market value based on information provided by site users.  Even though  Zillow specifically states that its “Zestimates” are not appraisals, cannot be used in place of an appraisal, and are simply a starting point in determining a home’s worth, according to the Arizona Board of Appraisal, Zillow is offering “appraisals.”  To offer appraisals in Arizona, one must have a license from the state and complete at least 90 course hours and obtain at least 2,000 hours of experience in appraising homes.

“The state is making the absurd claim that a computer program needs a government-approved license to operate,” said William R. Maurer, the executive director of the Institute for Justice Washington Chapter in Seattle, where Zillow is based.  “Zillow is not appraising any homes.  They don’t visit homes or work for agents or lenders, or charge for their services.  Zillow is no more appraising than the publisher of a book about how to estimate the value of a home.”

Maurer said, “For many people, having an idea of a home’s worth can help them decide where to look for a house or whether an asking price is too high or too low.  The Internet has allowed consumers to access information about homes previously available only to professionals and freed consumers from dependency on these established industries.  Unfortunately, as technology opens up information to consumers, the government is now protecting the corporate interests that once acted as sole purveyors of information from competition.”

Tim Keller, the executive director of the Institute for Justice Arizona Chapter, said, “This has nothing to do with public health or safety.  Arizona’s laws are being used to keep consumers in the dark.  That is not how government power should be used.”

This is not the first time the government has tried to use licensing laws to shut down the free flow of information that is useful to consumers.  The Institute for Justice litigated a number of cases involving efforts by the government to keep consumers from accessing information over the Internet.  These cases include:

• Taucher v. Born—IJ won a case before the U.S. District Court for the District of Columbia that enforced the First Amendment by striking down a regulation issued by the Commodity Futures Trading Commission.  The regulation would have required publishers of financial newsletters and Internet websites to register as commodity trading advisors.
• ForSaleByOwner.com Corp. v. Zinneman—IJ won its case before the U.S. District Court for the Eastern District of California, which struck down the state of California’s attempt to impose real estate broker licensing requirements on an informational website.
• Crockett v. Minnesota Department of Public Safety—In a case before the U.S. District Court for the District of Minnesota, IJ’s litigation led to the striking down of a law that forbade wineries across the country from accepting online orders from Minnesotans. 
• Franzoy v. Templemen—IJ represented two interior designers in successfully challenging New Mexico’s titling law, which prohibited anyone except government-licensed designers from using the terms “interior design” or “interior designer.”  The New Mexico Legislature amended the law doing away with the speech restriction.  The Governor signed the bill into law in April 2007.
• ZeroBrokerFees.com v. Slattery—IJ is currently challenging New Hampshire’s onerous licensing regime on behalf of ZeroBrokerFees.com, an Internet real estate advertising company.  Current state law requires Internet advertising companies like ZeroBrokerFees.com to become licensed real estate brokers in order to provide their service.

Chip Mellor, president and general counsel of IJ, said, “Each of these cases, including Zillow, involve the government trying to keep consumers from obtaining useful information over the Internet.  The web has democratized the American economy—it is time that government policies reflected that fact.”

Keller concluded, “Arizona should stay out of the business of walling off information that can help the public make informed decisions.  The Arizona Board’s actions here are both an unconstitutional restriction on the free flow of information and the last gasp of an anachronistic and paternalistic approach to limiting the public’s ability to learn things for themselves.”