Zillow, a great web 2.0 tool for real estate, has been sent a cease and desist in Arizona. I used Zillow as a way to get a feel for what my existing home was worth during the sales process and to understand the potential value of the home that I was purchasing. Zillow pulls its data from public records and aggregates them together into a really nice interface based on Google Maps.

A few more details:

The Arizona Board of Appraisal issued two cease-and-desist letters to the company that operates the popular real estate Web site Zillow, saying it needs an appraiser license to offer its “zestimates” in Arizona.

“It is the board’s feeling that (Zillow) is providing an appraisal,” Deborah Pearson, the board’s executive director, said Friday.

Zillow warns users the estimates it provides are not a definitive value but a starting point for consumers. Launched in February, 2006, the company claims it has 4 million users a month, including people wanting to how much their homes – or their neighbors’ homes – are worth.

…

Zillow issued a statement Saturday saying it disagreed with the board’s view, and pointed to an opinion issued by a national appraisers standards group that said online estimates aren’t formal appraisals.

“We strongly believe that providing Zestimates in Arizona is completely legal and in fact an important public service, given that Zestimates are the result of our ‘automated valuation model’ and are not a formal appraisal,” co-founder and company President Lloyd Frink said in the statement. (Quotes from The Columbian)

I seriously doubt that this would hold up in court; however, a small web 2.0 start up might not be able to weather the cost and resource drain of a court battle. I hope that they are able to come to some resolution. It would be a shame to lose such a helpful tool.