Can you tell me about Zaio and what it is doing?

• Zaio Corporation photographs entire cities, one building at a time from the street.
• In addition to the photographs, Zaio also collects appraisal analysis for each residential property and adds it to the database.
• Zaio is restoring the competitiveness and independence of appraisers who are banding together to inspect and appraise virtually every home in America. Zaio assembles a premiere group of local appraiser experts and provides them with photos, property data, a protected geographic territory and exclusive use of Zaio’s proprietary software in territories known as Zones. Appraisers are then able to efficiently inspect and appraise virtually every home in their zone, and Zaio’s software allows the appraiser to store completed appraisals in a large national database.
• Since the Zaio appraiser is required to inspect, rate, and monitor the values of every home in their zone, they become the “undisputed local expert” in that area, are able to correct and improve missing and incorrect data from county property records, and the software allows the appraiser to evaluate, analyze and report on a larger number of transactions leading to more thorough, reliable, and defendable appraisal reports.
• Zone appraisers then monitor every sale and changes in property conditions that occur daily, weekly and monthly so that customers can instantly order and receive a completed USPAP compliant appraisal with a current market value estimate. Zaio and its network of appraisers currently offer clients a 2055 exterior appraisal report, and the following additional valuation products are expected to be available in 2007: Desktop Valuation, BPO, Comp Search, Property Photo Report, and Insurance Replacement Cost Report.
• Zaio accomplishes this by deploying teams of local photographers and appraisers in each city. The photographers walk the streets, collect photos and addresses, and input them into Zaio’s proprietary software. Affiliated appraisers then interact with Zaio’s proprietary appraisal technology to view the photos and related data, and take such information back out onto the street via handheld computer to conduct the mass appraisal. Zaio’s technology and licensing arrangements ensure that photographers and appraisers are able to keep their data up to date, year after year. For example, appraisers review comparable sales monthly to make sure their analyses accurately reflect current market conditions.
• Zaio’s appraisal process allows an appraiser to research values for every property in advance of an appraisal order or property transaction. The resulting product is an accurate, objective, instant report that can be understood and underwritten by a lender.
• Appraisal reports are now complete in Spokane, and 5 lenders are currently ordering and using those Valuation products. Valuation efforts are underway in Orange County and many counties around the country.

Does Zaio produce an Automated Valuation Model (AVM) like product?

No. Each valuation product is produced by a licensed appraiser in conformity with USPAP. The primary difference between a ZAIO valuation product and a traditionally produced appraisal report is that the Zaio appraiser has inspected the property and prepared the report IN ADVANCE of the transaction.

Lenders and other customers have always wanted appraisals to be delivered more quickly, and by preparing the appraisals in advance and compiling them into a large database, Zaio is able to deliver valuation products instantly in just a few seconds.

By appraising the property PRIOR to the transaction, complete objectivity is attained since the appraiser is not trying to hit any particular value estimate. Rather, Zaio affiliated appraisers are required to inspect and evaluate every home in a concentrated area, thus becoming the only appraiser to have appraised every home. This assures all clients that the appraisal report is highly accurate, objective, and prepared by the most informed local appraiser possible.

Is this methodology USPAP compliant?

Yes, Zaio’s process and products conform to USPAP Standards.

What do lenders think of this approach?

Lenders know their borrowers may be shopping for lower interest rates or faster mortgage approval while they wait days or weeks for a conventional appraisal report. Naturally, a service that allows lenders to close a mortgage commitment sooner is attractive to them.

Speed is the main impetus for the advent of AVM models; however an AVM does not generally contain enough quality information for an underwriter to effectively analyze the property they are accepting for security. Zaio’s proprietary technology and processes allow individual licensed appraisers to efficiently mass produce large volumes of appraisals for every home in an entire city. The process ensures the appraiser has more data and better quality data than any other local appraiser. In addition, the “Pre-Appraisal” or appraisal prior to the transaction ensures objectivity of the final value estimate because the appraiser is not working to support any existing selling price or pre-conceived value requirement.

Most lenders have two sides to their operation, representing sales and risk. The risk side is looking for quality, accuracy and objectivity, while the sales side is interested in increasing market share by closing loans quickly. The Zaio process is designed to satisfy the needs of both by offering the objectivity and quality of professional local analysis with the speed of instantaneous mortgage approval.

Is this type of appraisal available anywhere yet?

Yes, it is available in our test market of Spokane, Washington and Mesa, Arizona.

Valuation products for Orange County, California are expected to be available in the near future.

What information does Zaio collect when photographing entire cities?

Zaio collects the street-level, front exterior view of each property that is visible from a public space, as well as its civic address.

Zaio never collects any information that is personally identifiable – all photographs are taken from public vantage points and are thus in the public domain. No information about individuals or building contents is ever recorded.

When we start an area, we advise local municipalities and police as to the nature and timing of our on-street activities.

What if a particular property is just too unique to be properly appraised by this mass appraisal process?

Appraisers make the final determination, property by property, as to whether their values will be available to clients through the Zaio system. Those properties that are deemed to be unique are handled on a case-by-case basis, and can be appraised by the responsible zone appraiser.