Online home value estimates can vary widely
It’s fun to get on the Internet to see how much a property supposedly is worth, but the estimate can be misleading.
Q. I was curious about my home’s current value, so I looked it up on two different online “home-value estimators.” The two estimates were tens of thousands of dollars apart! Why such a big difference?
A. Online estimates are only as good as the data and computer formulas that are used to generate them. An estimate that’s based on outdated or inaccurate information, or a computer program with a bug or two, can create a value that’s ridiculously too low or wildly high.
Free estimators offered by such popular websites as Zillow.com, Trulia.com and CoreLogic (which provides the estimates found on many bank websites) all use the same basic information: Data from public records, recent sales in the area and the like. But in some cases, that data is incomplete or simply too old to be of much use — a problem that can lead to huge differences between one company’s estimate and another’s.
Say that you recently added a bedroom or finished your basement, or that your home is in pristine condition. There’s no way that most online estimators could know about it, so the value they suggest could be far below what it’s worth today. Conversely, if your home has a roof that leaks like a sieve or your plumbing system hails from the Stone Age, the estimate you get likely would be too high.
I went to the Internet to find an online estimate of my sister’s home: a three-bedroom, 2½ bath townhouse with about 1,480 square feet of living space in a Los Angeles suburb. Trulia’s estimate was $258,000, while Zillow’s was a staggering $637,026 — a difference of nearly 250 percent. Her bank’s website provided a range of $208,840 to $245,160.
Then I went to homevalues.com. It operates one of the best online estimators, in part because it asks for some detailed information that the others don’t necessarily consider, like the condition of the property, number of fireplaces and the like. It provided a value range of $209,327 to $292,235, but targeted a value of $250,781 based on the additional info I provided.
It’s important to note that all four of those websites say their estimates clearly are no substitute for a professional appraisal by an expert who would actually visit your home and assess its physical condition. Appraisals typically cost between $200 and $400.
A better alternative to spending money for an appraisal would be to ask a local real estate agent to prepare a “comparative market analysis” for you. A CMA lists the prices that homes similar to yours are being offered for today, and also the prices that recently sold properties have fetched, both of which can give you a fairly reliable estimate of your own home’s current worth.
Most agents will prepare a CMA for free, hoping that you will hire them when you eventually decide to sell.
Q. What is a “zombie home?”
A. It’s a property that’s been vacated by its owner but hasn’t yet been officially foreclosed upon by the bank.
There are about 770,000 homes in foreclosure today, according to real estate information giant Realty Trac, and roughly one in five — more than 150,000 — are zombies. They can negatively impact the value of neighboring properties because they typically are in poor or unsightly condition and often attract squatters, vandals or drug users.
The state with the highest percentage of foreclosure zombies is Indiana, Realty Trac reports, where 30 percent of homes that are in foreclosure are vacant. It’s followed by Nevada (29 percent), Georgia (24 percent), Florida (23 percent) and Maryland (21 percent).
There’s little you can do if there’s a zombie home on your block. A small number of homeowners have solved the problem by banding together with their neighbors to sign a petition or to make constant calls to the lender, demanding that the foreclosure be completed as quickly as possible and the property sold to a new owner who will take better care of the property. Such efforts can create a public-relations nightmare for the bank and force it to take action in order to avoid alienating potential future borrowers.
Another alternative is for neighbors of the zombie to swamp city hall with phone calls, petitions, letters or emails. Some cities and counties have responded to such efforts by ordering city workers or private contractors to clean up the property and make repairs that threaten public safety, and then send a bill for the work to the previous homeowner or to the bank. After a lender receives a second or third bill, it will sometimes stop dragging its feet on the foreclosure and instead sell the home as quickly as it can to avoid thousands of dollars more in future charges.
Real estate trivia: People who live in Hawaii are the happiest in the nation, a detailed survey by realestate.msn.com says, followed by those who live in Vermont, Minnesota or Nebraska.
Ÿ For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2013, Cowles Syndicate Inc.