Unfortunately I wasn't able to afford to have a professional appraisal done for every house my realtor showed me. I'm glad you were in a different position.
Comparables are what a Zestimate is without the BS "special sauce" that Zillow makes you think exists. Comparables are free, and based on existing property market data (typically sold similar properties looking back a certain period of time). https://www.biggerpockets.com/rei/real-estate-comps-house-va... Yet again the tech community believing a problem exists to be solved that has already been solved. > In most mark…
Unfortunately I wasn't able to afford to have a professional appraisal done for every house my realtor showed me. I'm glad you were in a different position.
Comparables are what a Zestimate is without the BS "special sauce" that Zillow makes you think exists. Comparables are free, and based on existing property market data (typically sold similar properties looking back a certain period of time). https://www.biggerpockets.com/rei/real-estate-comps-house-va... Yet again the tech community believing a problem exists to be solved that has already been solved. > In most mark…
Most of Zillow listings come direct from MLS now. They've talked about this on their earnings calls.
Aside from the buyer, who can pay for his own appraisal.
Usually a buyer has already agreed to buy a house at a certain price. So if the appraisal comes back low, the seller doesn't lower the price. Instead the buyer just doesn't get a loan so they don't get to purchase the house they had their heart set on.
Happened to me when I sold my house the value came in 10k lower (really... now that same place is 30-40k higher than what I was asking a year ago).
A long time ago I got a real estate appraiser's license. Here is the procedure for appraising real estate, as taught by my state: 1) Pick three homes that you feel are comparable. 2) Pick out the material differences between those homes and your client's 3) Make up a value for each of those differences, and adjust accordingly (Unofficially speaking) If you don't like the number you come up with, just make different d…
In the late 90's I worked for an online mortgage broker, and 9 times out of 10 when we ordered an appraisal, the appraiser would ask us what the selling price was and return an identical figure for their estimate.
That actually makes some sense. That number is supposed to indicate the maximum someone would pay for the property. If you're in contract, especially after competitive bidding, then we know that number: it's in your contract!
The appraiser just needs to make sure that the number isn't fraudulent or crazy.
Yeah, but how accurate are appraisals? Several years ago I was reading about an analysis that found that Zestimates were about as accurate as appraisals are 80%+ of the time.
The job of the appraiser is to write down a number as large as or larger than the amount to be financed. They know this and they know the number in advance. What they do is not rigorous.
They won't write down a completely insane number. They're a first level filter not a fine detailed filter. "I'm willing to go on record that I found three recent sales in the neighborhood for about $whatever" where whatever is reasonably near what you're financing. One need only go a few miles to find houses a tenth the cost or ten times the cost. If your neighbors house sells for $X and you want a loan for $X they're not going to sweat it, if you are trying for a loan of $X times ten its going to be difficult.
I paid a couple hundred bucks for an ex-general contractor with a thick binder to inspect my house for hours, looking inside the furnace heat exchanger and testing every wall outlet and inspecting the plumbing and roof inside and out and insulation and foundation and everything. That is a detailed analysis of what you're likely to spend on maintenance and upgrades over the next ten years. Its probably more useful than an appraisal but it takes a lot more time and money.
Yeah people dump on Zillow quite a bit. Probably because home values can be a very emotionally stirring event. Zillow's aggregate economic data is solid, often a better predictor than the Case Shiller Index. I expect that Zestimates will improve over time as the data trickles down and lessons are learned.
This is correct. I used to work at Redfin and estimates are a sore point for homeowners. It's one large pissing contest for their egos. Everyone has the same complaint, "Why isn't my home priced as high as that one?!?"
I'm the other guy. I bought my house for 260k a year ago, redfin now lists it at 330k, and there is just no possible way that is correct.
Zillow deserves a fair share of the blame because they prominently feature a single number with dollar-level precision and bury the caveats multiple clicks away on a separate page. Some basic UI changes could avoid all of that: e.g. instead of showing $123,456, show a range like $115,000-135,000, and keep the last few digits at zeros based on their estimated error rates. Similarly, their graphs could use shading to m…
There is a range immediatly below the number, which seems pretty reasonable to me. For my place it shows a range from -8% to +10%
Where? On the public website I see only the $123,456 value unless I'm in the wrong A/B test group.
I'm still scratching my head and wondering what Zestimates mean for rentals.
For example, I'm giving serious thoughts to moving to SoCal, and I see a place that looks pretty nice... it's listed as being $2000/month, but then when I go to the listing it says Zestimate $2650/month. What's up with that?
Usually a buyer has already agreed to buy a house at a certain price. So if the appraisal comes back low, the seller doesn't lower the price. Instead the buyer just doesn't get a loan so they don't get to purchase the house they had their heart set on.
A friend of mine saved $15K on a house because the appraisal came in low. If the bank won't write a loan for the agreed price, the original contract is void, since it's contingent on loan approval. If the seller's heart is set on moving, he might well lower the price.
Really depends. In the Bay Area these days, sellers will usually only take offers with zero contingencies (because they can). Even if you do get a financing contingency in your offer and the deal falls through because of a low appraisal, there's almost always a back-up offer waiting in the wings that can cover the low appraisal with an additional downpayment (the bank doesn't really care about if the house appraises for the selling price, they just want to make sure that their Loan-to-value (LTV) ratio is OK.
I am quite disappointed in the research that went into this article. (1) Author discovers that Zillow has a specific claim about accuracy: "around 90% of the listing Zestimate is “Within 20% of Sale Price” of the home". Author then gripes that this is "a really large margin for error". Really? Because I was prepared to praise Zillow for such honest and clear reporting. It only costs a few hundred dollars per home (Zi…
I'm not sure at all how you can make conclusions from just 9 houses. I've been house hunting recently. Even houses in the same neighborhood are very different, and there are a lot of factors going into valuing a house. Also may be very subjective - some people would pay a lot for things that other people don't care about. Maybe Zillow is uniquely bad at one or two out of 20 factors - e.g., it can not detect a house in a good neighborhood that has been neglected and needs a lot of repair (I've seen houses in very good places that looked great from outside and required tens of thousands dollars of work on the inside just to be livable - maybe that's what happened to that -75% house - maybe it had a recent fire or flooding). Or maybe it doesn't value having a pool correctly. Who knows. But it's impossible to figure that out from only 9 houses, 3 per huge market! You need hundreds of data points to smooth out the individual differences and cancel out noise from all different criteria. That's exactly what Zillow's advantage is supposed to be - to aggregate thousands of data points. Maybe they do a good job, maybe not, but I don't think you can evaluate it by just using mere 3 houses per market of millions!