12 or even 30 live zones out of 7,500 zones in the US, in five years is not good news. Those who are bringing zones live are probably the best of the breed ... and one would expect a more lackluster performance from those who follow. So, even 12 or 30 live zones is not very impressive and does not guarantee long-term success. And how much market share are they going to pull if they are covering less than .5% of the available zones? Why would lenders bother dealing with them?
Also, the reality is that selling zones this year will be difficult for a number of reasons, including the current drop in stock price, lack of financing of the company, poor market conditions, etc.. There have been reports of a noticeable lack of interest (even a certain fear) at their various sales meetings in the US in the past year.
Without zone sales and only a dozen or so active zones (out of 7,500), and with probably few orders coming in for those zones, - the question is one of survival through current market conditions.
Zaio has had numerous problems meeting its obligations to zone appraisers in the past years, and now things are going to get worse.
One could argue that it does in fact need the zone sales to keep going this year. So, there you go ... the investors might just know what they are doing.
Bert Craytor, SRA
Point by point I'll follow that.
From what I understand, the 12 zones are a test, with hundreds of zones to follow almost immediately, not just 30 or so. Of the 7500 zones, I think only 3000 have a good chance of making a consistent profit if the AMC and all database spinoff sales are included. What I look for is a successful city or good percentage of a city to prove itself. If Zaio can prove half the zones in a city work, that's a major positive. Many zones have too little residential as compared to commercial, industrial, rural or undeveloped/useless geography. Zone owners need to avoid collapse, they need to see profit, they need it soon.
Zaio has to start somewhere. Realities of database construction and maintenance prevent Zaio from entering the market with 3000 zones ready to go on the same date. Market share should be measured in the cities Zaio has active zones in, with clients. Zaio has been sloppy in its rollout, making analysis of potential extremely difficult.
Zone sales should have dropped off a long time ago, as Zaio still hasn't reported database product sales after being in operation five years. But Zaio is run by semi-retired appraisers, not business developers. Those appraisers have shown every sign of being in well over their heads. Now the entire economy, real estate market and appraisal field are hurting and under the microscope. Reality hits home for Zaio and zone sales greatly slow. Good thing. Now Zaio has to pay attention to business operations instead of the standard Zaio koolaid PR. Zaio could make survival and market conditions almost irrelevant as limits if it can generate solid client and zone owner testimonials. Zaio has a serious challenge there. Zaio's last tools of survival will be database sales reports and testimonials.
Investors from zone owners on up the scale need to see that Zaio knows how to develop business. That is still a new and hotly debated issue with Zaio, something that should have been taken care of in 2004 before they sold more zones.
I suspect that if Zaio was put under the control of its top talent zone owners, it would do much better than by leaving it under the control of the semi-retired Golden Parachutes who seem to be just hanging on for the ride, off in a hammock somewhere, getting nothing developed on the market.
