Lisa Vergara

Lisa Vergara

B.ARCH. - Broker       
847.308.0321      Contact Me
847.308.0321
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What's Up with my Zestimate in Palatine. IL?


Monday, 01 Aug 2016 at 07:44 pm

 Zillow CEO Sold Home For Much Less Than Zestimate 

What's up with my Zestimate? I get this question a lot. And not just from my clients who reside in Palatine, Il US of A, either. If I had one wish, it would be that consumers, buyers and sellers in the real estate market would not take Zestimates as gospel. And here's why...because they are most likely off - sometimes WAY off. Why are they off? For many reasons.

First, of we need to understand how Zestimates are calculate. The Zestimates you see on Zillow is derived from an Automated Valuation Model (AVM). An AVM is "A service that uses mathematical modeling to value properties. The majority of automated valuation models (AVMs) compare the values of similar properties at the same point in time."All About AVMs There are many real estate websites out there that use AVMs. This is a technology based model. Computer generated... There's nothing wrong with AVMs UNLESS you ignore the following considerations.

There are a number of factors AVMs use which can make or break the accuracy of the market analysis: Incorrect data pulled from the Tax Assessor's Office (Tip: Everyone should take a look at the information on your local tax assessor's website and check it for accuracy), surveyor evaluations, etc. I'm going to focus on comparables for now. Comparable properties...so why is that important. I'll tell you something, it's everything. Comparable properties means that the AVM is pulling properties that are most like yours based on a set of criteria: number of bathrooms, number of bedrooms, interior square footage, location or proximity to your property or the subject property to name a few. The system finds these comparables and lumps all the sold properties together to calculate the AVM for your property. Where AVMs typically go rougue is when the data needs to be adjusted or is simply incorrect. 
 
Garbage in, garbage out. Sound familiar? AVMs' data is pulled from a number of sources; Tax Assessors' Sites, Surveyor's Valuations, etc. What happens to an AVM's market analysis when the data it is pulling is incorrect? This may shock you but there have been instances when the information for your property or a given property in the tax assessor's records is not accurate. In all seriousness, tax assessors work very hard to have accurate information regarding all properties in their jurisdiction but this is certainly a daunting task. For example, as silly as this may sound, most realtors are told not to enter the number of interior square footage in a property listing in the Multiple Listing Service (MLS). Why? Because realtors like myself go into the tax records (from the tax assessor) for that information and discover it is incorrect when in the midst of the transaction. So, when I do input this information in the listing, I make sure to note the source or where I retrieved the information. Crazy, I know. Point being, the initial data an AVM is pulling can and many times is incorrect.
 
Comparables, one of the most critical pieces of determining an accurate market analysis for a property. Here's an exaggerated (or not so exaggerated) example of how AVM's comparables can completely miss the mark. Ms. Sally Smith and Mr. Billy Bufford have the same general characteristics in their properties; 3,400 interior square feet, 3 bedrooms, 2 bathroom, Colonial, Finished Basement, built in 1976, one mile from each other. From this 50,000 foot view the properties look the same. However, what the AVM doesn't know is that Ms. Sally Smith's property was completely renovated 2 years ago. It now has beautiful curb appeal (professional landscaping) a chef's dream kitchen with a Viking stove, Sub Zero, remodeled bathrooms with heated floors, and all you have to do is wave your hand over a sensor and the commode flushes (Ok. This will most likely not increase the market value of your property). Mr. Billy Bufford's property has not been touched since the day the Certificate of Occupancy was put in his hand. The same avacado green carpeting is there (albeit wall to wall carpeting was a big selling point in the '60s and '70s. Not so much in 2016), golden yellow refrigerator and wall paper in every room including the closets. You can understand how these are not comparables even though they have similar overall criteria. One of the major misses with an AVM is that it can not take into consideration the condition of the property. In this particular example lets say that properties very similar to Ms. Sally Smith's property, renovations and all have been sold. So, the comparables the AVM is pulling are more for Ms. Sally Smith's property not Mr. Billy Bufford. Mr. Billy Bufford doesn't know that however, and is doing the jig every time he sees his Zestimate. Until that fateful day when he decides it's time to sell and he meets with me. Poor Mr. Billy Bufford has to wrap his head around the fact that the number he planned to sell his property for is off and he can't retire to Aruba.....just yet.
 
Let's talk about Zillow in particular. Did you know that the property data in Zillow can be edited by anyone. Tom, Dick, Harry and Mr. Billy Bufford can go in and edit anyone's property information. There are no controls in place to ensure that information is correct. In fact the site encourages folks to go in and edit property information for 'accuracy sake'. You can't see me, but I'm scratching my head right now. Here's my issue as a real estate professional. If I have a hard time obtaining basic info such as accurate interior square footage, how is the general public going to ensure their information is correct. You may say, "Hey, Lisa, It's not that difficult to calculate square footage for my home." And it's not.... as long as it complies with MRED (our local Realtor Board), MLS guidelines, Illinois Association of Realtors, and National Association of Realtors. With the site open to everyone manipulating data in Zillow how does our garbage in garbage out look now? Landfill. 
 
The initial purpose of Zillow was to be more of an entertainment site vs a bonafide real estate market analysis site. Here's the thing. There is nothing wrong with Zillow as long as folks use it in the way in which it was intended. To be fun. To be a starting point for real estate consumers, buyers and sellers to dip their toes in and start to get a feel for the real estate market. It was not designed to be nor is it today intended to be used to provide you with a bull's eye market analysis for your property. That's my job.

It's a Realtor's job meet you, tour your proerty, learn what updates have been done to the property, why your property is unique vs others on the market and go back to the office, sift through 20, 30, 50, 100 active, sold and pending listings and hand pick the ones that are most like your property. It's my job to discuss your Zestimate with you and provide you with a custom market analysis for your specific property. Am I putting in a plug for my profession? You bet I am. Because time and time again, I'm in a meeting with a seller or buyer helping them to understand why my Custom Market Analysis is different from the Zestimate they printed off, holding in their hand and are swearing by those numbers. 

This is a HOT market for buyers and sellers, ladies and gentlemen. Great time to get off your parents' couch and buy. Great time to downsize, and a great time to aquire investment properties. I love this industry and am here to help.

Just my two cents.

'Til next time.

Lisa Vergara

@properties

847.308.0321

 Lisa Vergara

 

 


Categories: Market Analysis

2015 Real Estate Predictions


Sunday, 21 Dec 2014 at 04:00 pm

I LOVE New Year Predictions and agree with all below except mortgage rates. I'm hearing from my lenders they predict rates will not inch up to 5%. We'll see what happens....Regardless, even at 5% rates are still at an all time historic low!!!!

 

Realtor.com®'s top housing predictions for 2015 are:

1. Millennials to drive household formation. Households headed by Millennials are expected to see significant growth in 2015, particularly as the economy continues to make gains. Millennials are expected to drive two-thirds of household formations over the next five years, according to realtor.com®'s report. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, are the two factors that realtor.com® points to in driving more first-time home buyers to the housing market.

2. Existing-home sales on the rise. Existing-home sales are projected to rise 8 percent year-over-year in 2015, as more buyers enter the market. Distressed properties will make up a smaller share of that growth, unlike in 2012, when a similar increase in existing-home sales was mostly driven by distressed properties.

3. Home prices will rise. Home prices are expected to continue to edge up in 2015, with realtor.com® forecasters predicting a 4.5 percent gain. 

4. Mortgage rates to inch up to 5 percent. In the middle of 2015, mortgage rates are expected to increase as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year. That will likely bring the 30-year fixed-rate mortgage to an average of 5 percent by the end of 2015. (It's currently averaging 3.89 percent, according to Freddie Mac.) The 1-year adjustable-rate mortgage, on the other hand, is expected to rise more minimally. "Lower ARM interest rates will influence an uptick in buyer interest for adjustable and hybrid mortgages," realtor.com® notes.

What are YOUR predictions??


Seller + Agent = Higher Sale Price


Wednesday, 03 Dec 2014 at 07:07 pm

2014 Statistics from National Association of Realtors (NAR)

* For Sale By Owners (FSBOs) typically have a lower median selling price $208,700 compared to $235,000. Thus, the typical agent-assisted home sale typically has a 13 percent hiigher sales price than the typical FSBO sale.

* Half if FSBO sellers took no action to market their home, and 73 percent did not offer any incentivesd to attract buyers.

So....even calculating in the agents' commission, agent assist sales will typically yeild a higher home sale price. Makes cents....actually most likely dollars!


Categories: FSBOs