Zaio Selloff

[Couch Potato]

Won't last forever

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.

I don't think it would do any better from a sustainability viewpoint no matter who is in charge. Even if zones were free, the numbers just don't add up in a positive way for an appraiser, then you have the questions about the product itself.

They are executing the plan quite well. Every day that passes is more money in their pockets. They are smart enough to know that once zones go live, and demand for the product is not there, the party is over.

There are zone owners out there who are now approaching (or have reached ) the end of their 5 year license for the software who have yet to receive a dime of revenue from their investment. It is fine to say some test zones are starting up, but those zone owners were told a test zone was already up and running in Spokane when they purchased their zones all those years ago. From where I sit there are only two realistic views of Zaio, a very poorly executed plan for a real business or a very well executed scam.

 

[Ross (CO)]

Could hindsight ever make one conclude that they may have been charging their buyers too high a price to get pieces of that very large pie ? $9,000 was the going price when marketing made a show-and-tell stop in my city more than a year and a half ago. Six suits were hosting, four attendees were there (yes, I was among them and the count was 4) and there were about 75 to 80 empty chairs.

Something about that $9,000 amount was so souring, and perhaps because it was also basted with the knowledge that there were yet copious costs to meet for one to properly prepare and tenderize their zone....while they then waited for unknown clients to crank up an ordering feast and begin any process for recouping invested costs and being able to experience any typical feel-good sensation of actually "making" some money ! Breaking-even.....was still many, many reports away.

Did Fannie, et al, ever make any definitive statement about a collective willingness to legitimize and accept the mainstay product that appears as the bread-winner for all, that Z-2055 exterior-only report ? Were there ultimate end-user/buyers of that product who were satisfactorily enraptured with possessing bundles and bundles of loans.....backed up with valuations where information gathering was anchored by from-the-roadway observations ?......just as all the other news about fraud, foreclosure and implosion have been hitting the newsstands on a regular basis over the past two years. That's right, I forgot, Scope of Work. Ponder those (fully-USPAP-compliant) Desktop Valuation reports and BPO's and we see where "scope" has taken us all.

I never criticized the investors and all the while could only determine, for myself, that if I had a $9,000 wad at my immediate disposal I would have opted to spend it differently......like MLS dues, E&O premiums, CE classes, annual report software tech support "renewals" when things are actually running o.k., ...and gasoline.

 

[Restrain]

What I want to know is why haven't the zone owners sued Zaio for fraud?

 

[Mztk1]

What struck me when Zaio came to my town was that it was obvious they were looking to get appraisers to do their data mining for them and instead of paying the appraiser for the work they wrapped a ribbon around it and got the appraiser to pay them.

My wife and I discussed it for about 15 seconds before we both started laughing.

 

[Mztk1]

What I want to know is why haven't the zone owners sued Zaio for fraud?

Belief/conviction is a funny thing, it clouds good judgement, even right from wrong. These people believed in Zaio enough to spend big money. They aren't going to let that belief go very easily.

 

[Couch Potato]

What I want to know is why haven't the zone owners sued Zaio for fraud?

Because the system has a good legal foundation. What "zone owners" purchased is a software license. They received the software. The software does what it was described as doing. Where is the fraud in that?

Zaio never promised anyone would make money. They merely said that if orders occurred, the appraiser would get a cut. :new_all_coholic:

 

[Mike Kennedy]

Zaio has to start somewhere.

No. It doesn't.

 

[xmtraterbcra]

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.

These are intelligent observations. Yes, they would be better off, if Zone owners had more say in the management.

I would add:

1. Study the last balance sheet from March 31, 2008 at http://www.sedar.com and notice that they had a deficit of $17M and that the current capitalization has dropped from $42M to $17M, due to the falling stock price. It appears that they are broke ... unless revenue from AVM and their AMC operations picked up significantly in this quarter.

2. Look at the notes indicating that recent acquisitions were largely for Goodwill and Intangibles. The millions of dollars in Goodwill that they have on the books could be downgraded by their current insolvency - if they are in fact insolvent.

3. We don't know their current quarter revenues from AMC and AVM operations - that is an unknown. We do know they only had 52 zone sales.

4. We see $5.7M in deferred income from Zone sales (about 670 zones). They have to return this money if they don't follow through on supplying photos and property data to zone owners. As of March 31, they were a bit behind. Did they catch up in the second quarter? - This is apparently the reason they stopped focusing on zone sales.

....

The next balance sheet that comes out for the quarter ending June 30 should be very interesting to study.

The downside with going public is that the leverage investors bring to the table can work both ways.

Bert Craytor, SRA

 

[GCJim]

What I want to know is why haven't the zone owners sued Zaio for fraud?

Perhaps they drank too heavily of the Kool Aid......if I were in for 9 or 10 Large, I would hang in as long as I could.

 

[INSPECTOR]

Zaio Schumayo

If you "own" a zone with say 30,000 homes in that zone, how do you do a "drive-by" on all 30,000 homes once a year? I would like to see that defended in court! Zaio is just another unreliable AVM with the blessing of an idiot who holds an Appraisal license! IMHO!