Why is Zillow so far off in Utah? What is a "non-disclosure" state?

Zillow and eppraisal and other amazing web services have been a great help to investors.  They allow the non-agent to quickly get "in the ballpark" data on home values.  In fact, I personally use Zillow and eppraisal every single day to help me do my first-pass filter on all the new and resurrected listings (30, 60, 90, 120, 150, 180 days).  It is tedious checking about 100 listings on Zillow, but doing my own daily comps on more than 25 listings would put me in an asylum.  So I really like these services - but only as a filter against asking price.

But the big question is why do home values between Zillow and eppraisal differ so much, and why do they differ from values of the "appraisal quality" CMA's that I personally run?

AVM stands for "Automated Valuation Model" (or something like that) and it describes the algorithm or complex formula that goes into getting a Zestimate or other value.  So there is the first clue.  It's just a formula.  And each house is different and has unseen pros and cons for the future buyer that the formula can't possibly see.

But the bigger issue is the data from nearby home sales that Zillow uses as the baseline for the neighborhood.  In many states the data is solid, but all data is not created equally, and in NON-DISCLOSURE states, this is a true mouthful.

Last I heard, eight states in the USA are non-disclosure states.  This means that the actual price that someone paid for a home is, by law, kept private from the public records.  

If the actual sales prices are disclosed, then Zillow gets better numbers, but it also gets the government's fingers further into your personal business.  When I moved from Maryland to Utah, I had to pay $20,000 TRANSFER TAX to the state of Maryland.  Why a transfer tax?  Because they have the data, and the powers of taxation!  They do it because they can.

So Utah and seven other states keep the data off the politicians' radar.  Perhaps other non-disclosure states have taxes on home sales, but Utah does not.  Of this I am glad.  Imagine if each time someone sold a house, they had one more big fee to pay.  A lot more people would be under-water, including the flippers that I specialize in helping.  The deal velocity would slow considerably.

So if you are in Utah, be thankful you are in a non-disclosure state.  But anywhere you are, don't hesitate to using Zillow as a first pass, and then call a good Realtor to give you their best CMA as you are finalizing all prospective deals.