Home Value Zillow vs. Realtors vs Appraiser

[flower04]

I've read posts on here that the online value on zillow and other sites are high, by about 10%. We are close to qualifying for a lein stripping of our 2nd mortgage. Our attorney wants us to get this sorted out before we file.

We had several realtors give us the value of our home and it was about $330,000, Zillow's value was $311,000 and 10% of that is below our first! The realtor said it was that high (I was shocked it was that high) because it is in the lower price range of affordability in our area and they are starting to see some "movement" in the under $350K range. Over $500K is still pretty stagnet.


I find this hard to believe because there are still SO many homes in our neighborhood and area that are for sale and have been for a long time, several are for rent too.
For example, Two doors down from us a home was for sale for about 9 months before they converted it into a rental property. It has a bigger lot, 2 more bedrooms and a den as well as 750+ additional sq. fortage than our has and it was listed at $405 and never sold.

I think we may have to bit the bullet and get an appraisal, I just don't want to spend that money if I know we aren't going to be in the right range.

Anyone had experience with this?
THanks

[StartingOver08]

Sounds like you have Realtors that are either new or not very experienced with this type of market! Here is a way to find out what the value will be without using an appraiser right away. Have the Realtor give you only the 3 to 4 closed sales within the past 90 days. Only of exactly comparable properties in your neighborhood. If they have to go outside of the neighborhood - then don't use the sale.

At least you will know an approximate value before you engage an appraiser.

[fltoo]

SOver is exactly correct.

Remember, the value of anything is what a willing and able buyer will pay for it. Only closed sales count, not houses that are just on the market.
An appraiser will use the same comparables as a realtor, so why waste the money? Key is, you need a very experienced realtor.

Zillow is okay for an estimate but does not take into account the financing terms. A good agent can call the selling or listing broker and find out if there were any seller concessions. For example, maybe a house sold for 250,000 but the seller gave the buyer 10,000 in closing costs making the real sale price only 240,000. Only the realtors and appraisers would know this.

[laurannm]

I have read several articles that indicate that Zillow is all over the place...high by about 10% in some areas, low on other areas. I have also heard that cyberhomes.com is fairly accurate for an online home valuation.

[HHM]

Zillow can be too low some times,

Bottom line, a Zillow valuation will not be accepted by the court.

[DownNotOut]

Zillow can be too low some times,

Zillow is low on my home. Zillow says the value is $257,000, but when I did a custom valuation on their site, pulling comps in my neighborhood, the value came out to $320,000. Zillow also has no idea what your home is really like - they get their basic info from tax records.

Now if I could actually sell my home for $320,000 in this market, I could get out of this mess!

[StartingOver08]

Now if I could actually sell my home for $320,000 in this market, I could get out of this mess! by DownNotOut

See this comment? It illustrates the problem we are having in this market.

The definition of market value is what a ready willing and able buyer is willing to pay for your home (property/asset) from a willing seller.

So, as an example, if no one will pay $320,000 for DownNotOut's home - then it is worth what someone will pay for it - no less no more. Its that simple. So, when you are looking at value you have to be realistic. Don't use last years' value or a value set by the tax authorities. If it won't sell for X price then it is not worth that price.

[fltoo]

The definition of market value is what a ready willing and able buyer is willing to pay for your home (property/asset) from a willing seller.
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Hey SO, stop stealing my line.

I love the people who yell about a short sale in their neighborhood. Hello...........that's what the house is worth on the day it sold!

[justbroke]

I don't trust or use Zillow for pricing anymore. I subscribe to a service which costs $$$ to run an automated valuation model against a property. Those have been the best so far (outside an in-person, non-drive-by, full appraisal).

I also don't use Realtors to perform appraisals for me. Realtors will give you a sale price and will do almost as bad as Zillow in using "comps". The "comps" are the key... but... what is actually inside your home and the general condition of those accouterments are what's important.

You can compare two exact model homes within the same neighborhood, and still have different pricing (especially in my case). I'm on conservation, have upgraded flooring (hardwoods), brick pavered enclosed patio, front porch and front balcony, 3 air central air conditioning systems (with 3 5KVA emergency heating coils), a heated pool, hottub, garage apartment, and a larger lot. I also have a different "elevation" than the others. That just doesn't show on any on-line tool, and even the real estate agents miss the subtleties.

As HHM writes, some things won't even stand up in court. I personally wouldn't use a real estate agent's CMA, Zillow, Domania, or any other "appraisal" where it wasn't performed by a licensed property appraiser who personally inspected the property, inside and out.

If you're looking to lien strip, save yourself time and perhaps money too! Just get a licensed professional appraiser to perform a full property appraisal! I have seen too many cases in my District where people used guesses, hunches, and even Real Estate CMAs... only to be met with objections causing them to spend more money to do what they should have done in the first place... order a full appraisal!. My appraisal cost me $299.00.

Property Appraisal... $299
Certified Letters and Service... $22.25

No objections and no hearing to strip a $130,000 lien... priceless

[fltoo]

Realtors will give you a sale price and will do almost as bad as Zillow in using "comps". The "comps" are the key... but... what is actually inside your home and the general condition of those accouterments are what's important
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Not true. Experience is the key. Just like you would not hire a discount lawyer, don't hire a discount realtor.

An experienced and good realtor will never, ever give you a "sale price".
They will simply show you what has sold with what amenities in the last 3 months, the comparables. Your house value will be based on what sold plus or minus any amenities that matter to a buyer.

Realtors and appraisers most certainly do add or subtract value from the sold comps to come up with your value. The problem that arises is when you think the hardwood floor you installed for 3,000. is only worth maybe 200. as an added value.
Elevation is irrelevant because you would never comp a two story colonial with a ranch in the same neighborhood.

And........you can line the walls of your house with gold, but you will never get more money for your house if it is so far out of price range for the neighborhood.

After all is said and done, you still are only going to sell for what an able, willing, and ready buyer will pay for your house TODAY.

Historically only lenders use appraisers, reason being, they want an arm's length appraisal. But, when banks get greedy to lend in an up market, appraisers become a major part of the problem like during the savings and loan crisis and during the past few years. Ever notice that your "bank appraisal" done for your home equity loan might be just a bit high???

btw, some appraisers call the good realtors for elevation and upgrade and other information to complete their appraisals. Yes, they even run the appraisal price by them and ask what they think.

[StartingOver08]

Fltoo is right - the appraisers call for comp information, call to verify comps, call to ask condition - they rely on the experienced Realtors to double check the MLS data.

Experienced Realtors adjust for upgrades and condition and concessions. You can't get that with AVM's like Zillow.

[justbroke]

I agree with most of what you posted, but my experience selling 3 homes, differs in some areas.

Elevation is irrelevant because you would never comp a two story colonial with a ranch in the same neighborhood.

Elevation, in my example, was the same exact model home (colonial) with different exterior features (elevation).

btw, some appraisers call the good realtors for elevation and upgrade and other information to complete their appraisals. Yes, they even run the appraisal price by them and ask what they think.

Agreed, mine did such a thing. However, I had several top selling and great Realtors way overprice the place. Again, the comps are the key to the value because that's what the bank appraiser will use and that's what a smart person will look at when trying to determine what they should spend on a home.

Yes, Realtors look at the MLS too, with historical and current sales data, but the appraiser is looking more at comps than I've ever had any Realtor do. Plus an Appraiser will generally perform at least 2 different types of appraisal. One is the market analysis, which is what the Realtor does (but I don't think they do as well, which is my point). The other two are the cost to build and the rental analysis. Generally, the rental one is moot.

Appearance of a home is subjective as you suggested. However, I will pay more for a home that has upgraded features, than for one without, so interior condition does count. For example, a home which needs much paint, love and care, molded carpet, ugly linoleum, on the same model, will have less value than an exact model next door. In the end, the market wins, but just looking at the outside of a house and/or looking at MLS comps alone, does not set a home's price... unfortunately.

I've never had a "high" appraisal. In fact, one came in too low to get a refinance deal. Some lenders are more responsible. When a lender calls an appraiser and tells them they "need it to come in at $XXX K", that appraiser, if he wants continued business, will generally make sure it's above $XXX. I have been fortunate to not have worked with such lenders.

[Flowers]

I brought the realtor in who sold me the property and explained my situation. She gave me an appraisal in writing for a good amount for what I needed and then my attorney dropped that number by $30k given the market.

[justbroke]

I brought the realtor in who sold me the property and explained my situation. She gave me an appraisal in writing for a good amount for what I needed and then my attorney dropped that number by $30k given the market.

Is your attorney a Florida Licensed Real Estate Appraiser, or does your attorney have a real estate license?

Otherwise, that has trouble written all over it.

The reason I like appraisers, I can see their math, I can see their basis, and I can find out myself if the numbers look okay. Even with my lien strip, I scrutinized the appraiser's values, checking comps myself in the MLS, and looking at the sources (Marshall and Swift, local building cost data) that my appraiser listed in the appraisal on what they did to determine the value.

I didn't want anyone to perform a forensic review of the appraisal and cause me all sorts of litigation on the value and having to have "expert" testimony. Sure, most of these go without question (when a licensed real estate appraiser performs the appraisal), but some do get questioned when the value is close. That's probably why your attorney lowered it by $30K more. That just doesn't sound right to me.

[justbroke]

Here's a well known Bankruptcy judge's recent opinion on CMA's and other appraisals performed by a Realtor.

[Lender] presented a Comparative Market Analysis prepared by a real estate agent, which sets forth three figures:...

[Lender's Realtor CMA] is entitled to minimal weight. It is not a formal appraisal conducted by a licensed residential property appraiser and no inspection of the Property was conducted. It contains no basis for the selection of the alleged comparables or the calculation of the alleged value.

This was in a case where the Realtor's values were $307K for market value, $292K for quick sale, and $314K for listing price.

The professional appraisal came in at $224K. It just goes to the weight of which is more acceptable in a case where you are lien stripping, and the lender is not happy.

My contention has never been that a Realtor can't give one a CMA or an estimated value... but a Realtor's number will not hold up in court. The only way a Realtor's number could hold up in court, would be to go to an evidentiary hearing (adversary proceeding or contest matter) in the Bankruptcy court and call the Realtor as an expert witness to give a forensic analysis of how they performed their analysis, then be prepared to have the lender present a certified appraiser with years of building experience, rebut everything. Maybe you'll win, but the cost of that... is a lot more than a $300 appraisal.