patrick.net

It's God damned Criminal is what it is.

I've been running around like a lunnatic trying to buy a house for three years.

http://www.ziprealty.com/buy_a_home/logged_in/search/sold_homes.jsp?index=3&source=SEFMLS&cKey=02xjt4q5&page=1&listing_num=F1080365&numResults=12

Click on the sold icons the majority sold this year, and for under 55K.

First mistake: using zilow's 'zestimate' as a measure of market value.

Zillow really gives you a rough general idea of what the house is worth. Immediate hood (and shortsales/foreclosures that are underway) are not reflected properly in Zillow.

Zillow, Zestimate, Appraisal.com..... These GIGO sites - 'garbage in garbage out' are a big part of the problem! The information they sling is pure garbage. If you look at the political mechanics involved; sites like these, they are driven primarily by realtors. In that, the only information they can suck off the net comes from listings generated by realtors. That opens a whole can of worms regarding opportunity to skew, and fabricate data. Add to that, the unbelievable amount of money they [NAR] spend on lobbyist, and you start to see a clearer picture. Interest groups like National Association of Realtors, don't buy lobbyist to help their customers, they are simply bought as a mechanism to increase the ROI - Return on Investment... to the corporation; Period!

Back to the bottom feeding ZILLOW'S of the NET; and while were at it, let's suck some more scum into the septic pit - RealtyTrack. The best information that this cluster F*** of bottom feeding, non-producing, useless mis-information producing clan members.... I'm out of adjectives, can suck off of the net, and regurgitate, is the data that is entered into countless databases across the country that comprise the real estate industry.

This would be information captured by county assessment records, listings by realtors, transaction by states for properties settled, etc. There is no way to verify this garbage. I'll give you an example; one tiny piece of data that leads to mountains of mis-information in the data.

For example a house sells for $600,000 in 2010. Now lets dissect the sale. In 1999 the seller paid 120,000 for the lot. In 2000 the seller built a house on the lot, the seller paid 345,000 to construct the house; total in $465,000. The assessment records show the property being purchased in 1999 for 120,000, then sold in 2010 for 600,000 for an annual appreciation of approximately 40%! In an area with few sales, you can easily see how this generates garbage information in the databases.

Another example is Sq'. Basements were never counted in sq ft. of a home. Now, to make the property appear bigger on a listing; if the basement is completed, then the square footage is increased by the size of the basement. Just one problem, no one told the State 's. So for example; a house sells for $450,000. The State has it on the books at 2200 sq ft.. The owners finished the basement, and the realtor listed it as 3300 sq' in the listing. The listing shows the property at $136 per square foot. Zillow shows the property at $204.54 per square foot, because they suck their sq. ft data from the assessment records.

These are just two small examples of how the garbage numbers from these sites, make it absolutely useless for intelligent analysis. You can then get a picture of how this garbage information filters up the food chain. Media constantly quotes this garbage information, as it is the holy grail. And, did you ever wonder where Case Shiller, and other GODS of Wall Street get their information?! It's all tainted to varying degrees by the pissing in the data pool of low level bureaucratic data entry pukes, useless realtors, and idiotic bad data compilation clans as zillow. To culminate in to one huge steaming pile of useless crap!

Zillow excludes foreclosures and short sales in making it comparisons. Click on the Zestimate for one of the home that sold low and they state this explicitly.

Is there any site that gives a better idea of values? Seems like nothing is very reliable lately whether it is an actual appraisal or a site like this. A friend of mine is in Cota de Casa in So. CA and trying to sell his home (as in a normal sale) but cannot do so due to the numerous foreclosures and short sales occurring around him. Seems like *value* is a moving target right now.

sfbayfam says

Is there any site that gives a better idea of values?

If you know what it would rent for, you have a pretty good idea of what it's worth.

You could do a lot of complicated math on the rent, your income, the property tax, etc, but a good rule of thumb is just to divide the annual rent by 0.06. So a place that rents for $1000/month has an annual rent of $12,000/year, and a value of about $12,000 / 0.06 = $200,000

I just have to remark, at the mentality still prevalent in the market. There is no slight intended to any poster.... But, you don't "Try to sell a house", you simply 'sell it'. The fact that the market is flooded with short sales, and foreclosures, as the poster mentioned, does not allow for the interjecting of mitigating conditions into the market to favor his friend, just because he is a nice guy! He either want's to sell or not. It is purely a financial transaction; emotions have to be left at the door. Regardless of what a seller states as the reason for selling, if you don't have to sell, you won't have you property listed at this time; period. This is a cut and run market, with the same dynamic at play, as when it was topping. Sure, at the top you could sell a house for 500,000 in 2006 that is only valued at 275,000 now. But if you did, to move onto a bigger $750,000 mistake, you see your property worth about 375,000 today. The only way you made out, was if you sold, and then rented. It is what it is! The longer you hesitate on pulling the trigger; if you have to sell, the worse off you will be. So, hunker down, this wit be a bit of a haul. Nothing can begin to change until employment begins to heal. There is absolutely NOTHING in the pipeline that would change that picture, and it won't cure itself. There is a new dynamic emerging, and regardless of what you hear, and read; no one knows what the new landscape will look like. GOOD LUCK!

In my area, zillow's estimates are generally nowhere near reality. A short google search shows most people feel the same way, with the consensus being the estimates are far too high.

sfbayfam says

Is there any site that gives a better idea of values?

If you know what it would rent for, you have a pretty good idea of what it’s worth.
You could do a lot of complicated math on the rent, your income, the property tax, etc, but a good rule of thumb is just to divide the annual rent by 0.06. So a place that rents for $1000/month has an annual rent of $12,000/year, and a value of about $12,000 / 0.06 = $200,000

Thanks - that gives me a good idea - which is about what I thought.

support says

For example a house sells for $600,000 in 2010. Now lets dissect the sale. In 1999 the seller paid 120,000 for the lot. In 2000 the seller built a house on the lot, the seller paid 345,000 to construct the house; total in $465,000. The assessment records show the property being purchased in 1999 for 120,000, then sold in 2010 for 600,000 for an annual appreciation of approximately 40%! In an area with few sales, you can easily see how this generates garbage information in the databases.

And in many cases you will find the same sale back in 1998 for mear 200K or less (Land+Structure) without any renovations. So 200% increase was very common.

sfbayfam says

Is there any site that gives a better idea of values?

Most sites use current comparables, but all comparables have been driven by bubble prices during bubble years. So No! you have to do alot of homework. You can look up the prices back before the bubble (redfin,Zillow) say, 1996-97 and factor in inflation to today. I roughly comes to 35-40%.

So if dig up home prices back in then and multiple by additional 35-40% max gets you value. Also look at the rents as Patrick discusses. You will find both methods gets you the same number (value).

http://www.housingbubblebust.com/OFHEO/Major/NorCal.html
http://en.wikipedia.org/wiki/United_States_housing_bubble
http://en.wikipedia.org/wiki/Irrational_Exuberance_(book)

The second edition of Irrational Exuberance published in 2005 is updated to cover the housing bubble, especially in the United States. Shiller writes that the real estate bubble may soon burst, and he supports his claim by showing that median home prices are now six to nine times greater than median income in some areas of the country. He also shows that home prices, when adjusted for inflation, have produced very modest returns of less than 1%/year.

Often when a house is listed as bank owned, you will see on zillow or elsewhere that a transaction occurred very recently at a highly discounted price.

I believe that price is the transaction price the bank essentially "paid" for it when they took ownership. In other words, I believe that it is the value of the mortgage that the bank just had to eat, rather than an actual recent sale at that price.

sfbayfam says

sfbayfam says

Is there any site that gives a better idea of values?

If you know what it would rent for, you have a pretty good idea of what it’s worth.

You could do a lot of complicated math on the rent, your income, the property tax, etc, but a good rule of thumb is just to divide the annual rent by 0.06. So a place that rents for $1000/month has an annual rent of $12,000/year, and a value of about $12,000 / 0.06 = $200,000

Thanks - that gives me a good idea - which is about what I thought.

I think this underprices the property, as 10 years normal price inflation will make the $200,000 a steal. This assumes we don't repeat the Japan experience and actually start seeing a sustained price appreciation trend, something I am of course far from convinced we'll see.

$200,000 @ 3.88% pencils out to around $1000/mo in carrying costs.

$400,000 @ 3.88% pencils out to $1600/mo in carrying costs.

A mild 1.5% annual appreciation will turn a $400,000 property into a $500,000 property after 15 years.

I think prices are fair now in many areas, but I also think we're not out of the woods with the macro financial situation (things could get a lot worse before they get any better).

Reconciling these two views is somewhat difficult, but I guess in the worst case buyers can just walk away if things get really ugly.

a few sites that can give you more accurate data:

- looking up deeds at the recorder's office (transfer taxes, mortgages, etc)
- foreclosureradar
- redfin.com is so far the least worse MLS look-up interface I've found because they include previous sales (date and amount),
although i've read the MLS data may not be accurate (for example, builders give bonuses that are unlikely to be reported)
- propertyshark.com

Can you pay more transfer taxes than required?
Do people record transfer taxes on the "back" of a deed? (is that page 2)?

I joined the forum today and this is my first post. I was impressed with some of the postings.
Marcus wrote:"I believe that it is the value of the mortgage that the bank just had to eat, rather than an actual recent sale at that price."
I think he is right, although Zillow does try to exclude "unusual prices or non bona fide transactions", prices too high or too low, from its Zestimates calculations.Yahoo Real Estate website used to list (I no longer check it) the loan balances as the value of the foreclosed properties. Zillow has improved its estimates lately IMO. I can tell you from my own fully paid two appraisals taken one in mid 2009 and the other in 2004 in SF ("after and before"), the Zestimates were actually lower than the real appraisals in each case. I sure would like to get hands on its algorithm: metrix attached to acquisition costs, comparables, permitted improvements , weights attached to the same Zip code area price trends, etc. I think Zillow has a disclaimer saying its Zestimates are not projections for the sales or market prices. Redfin is better but their geographical coverage in CA is somewhat limited. Also, Neil's comments are right on the head. Some counties (not all) have great recorder's online data open to public free of charge to verify the MIS data which have considerable errors. For a long time, I subscribed to the idea that non-bona fide transactions such as foreclosures did not incurr the transfer tax, but I'm not sure. Since I don't have access to the MIS database nor do I have a friend who has access, I must resort to free publicly open databases for my extended searches, including drive-by-inspections. The counties of Hawaii offer the best online data of all other counties I have seen so far. San Francisco County is still on the microfiche (five years ago) and you have to go to the city hall to see their data.

well i have a question for anyone the reason i was checking out zillow is i have or will have in september about 400 large to do what i please with, i was wondering if it would be better to use a broker to buy a house with cash, or if there is a better way to buy a house in cash

surfingerman wrote: "...use a broker to buy a house with cash, or if there is a better way to buy a house in cash"
Would depend on your purpose of the purchase, type of property and its location. My method is to do my own research as much as possible without bothering an agent or broker before engaging one. My time horizon tends to be long and those guys don't have patience. Use all Zillow, Redfin, free online databases by large realtor corporations (Prudential, Coldwell, etc), Realtor.com (offers a much abridged MLS data free of charge), and county recorder's public data. In the process, I am carefull not to contact any person for an implied or potential engagement so that I will be left free to choose my own agent when time is right. I will then have very detailed, pertinent questions to ask a broker or agent to qualify him/her before I decide to hire. Or I may decide to go directly to the listing agent to deal. This would put me on a higher level required to deal with the listing agent and my own due dilligence becomes more important. Most likely, I will have done drive-by-inspection of the candidate properties before engaging an agent.
Depending on where you want to buy a property, your $400K(?) cash can buy, if you like, a property which banks may not be generally willing to finance (a large land lot with a property needing lots of TLC), which is to your advantages - cash is king. Definitely, I would go for REOs and bargain hard.