patrick.net

Nomograph says

That’s pretty obvious to everyone here. You just repeat what they tell you, word for word, without thinking for yourself.

You've been claiming all along to be a "Libertarian" which based on your posts never seemed to make any sense. I've just figured it out what you've meant all along. You've just been miss spelling it: you are a LIEbertarian. Please use the correct spelling from now on. Thank you.

a4adam says

I forgot to mention, house is about 1760 sq feet. It was a complete remodel. Floors, walls, lighting & fans, electrical, bathrooms, master bedroom, kitchen, new roof, HVAC, added an extra garage space. Originally the house was around 1450 sq/ft. They did a nice job on the remodel too, lots of nice details, new windows all the way around, etc. The yard needs a little work but it’s not bad and it has automatic irrigation built in with good solid fences, etc. It was not a cheap remodel, that’s for sure.
I don’t really expect that the improvements increase the value that much. And this deal may fall through anyway, we’re not sure yet but it would be nice to get a sense of what we should expect to offer on a house in the future. From what I can tell, the best way to do that is to go by what houses are selling for in the area right now. The problem is most of the houses that are selling are foreclosures, so it’s hard to gauge exactly what the market will bear.
The impression I get is that, for the most part, the online estimators only give you a rough ballpark number only and even then they can be way off.

Well if it was 1400 sqft, then it was probably a 2br, and they added a third bedroom. Sure that adds some value, but then don't forget, it's now the a big fish in a small pond. It's hard to speculate value on the oddball house out of the group, when most of the neighbors houses are smaller.

The house I bought has this same reality. It was a 2br house in a neighborhood of 2br houses. These were winter cottages for the snow birds, when they were built in the 50's-60's.
I paid 160K but offered 170K it appraised considerably lower so I got it for what it appraised.
The average sale price in my neighborhood has been 70-90K. Mainly because most of the houses are 900 sq ft, and small houses are harder to sell.
My house 2100 sqft, is one of the few houses in the whole neighborhood.
When real estate rebounds, I can only hope, that just because a 2100 sqft house sales in Hollywood Lakes or Hollywood Hills for 300K, that doesn't automatically make my house worth 300K. As North Central Hollywood is not either one of those neighborhoods.

I think 160-175K will be the magic number my house will still be worth in ten years.
Unless we all get a pay raise, to keep up with that imaginary inflation they keep talking about.

Comps and sales histories will get you in the neighborhood, but I wouldn't stop there. There are several basic metrics for arriving at the real value of a residence, (as opposed to going prices), including the type of land the house was built on, (clay, sandstone, etc), the size of the parcel, type of parcel, (corner property, greenbelt, right off the Interstate, etc), proximity to business centers/airports, flood histories, proximity to high power lines, processing facilities, any easements, etc. As for the structure itself; there's the obvious like sq footage and layout, but keep in mind the foundation type, insulation, roof type and any age-related issues, (wiring, plumbing, potential asbestos issues, foundational issues, etc). Then there's the abstract stuff, like is there an HOA, what's the primary demographic, number of streetlights, sidewalks, cut-through traffic, crime-stats, school districts, number of weekly rentals, (a burgeoning trend), etc.

I think the biggest problem with home value estimators is they do not take into account the condition of the properties. A 4 bedroom crack house has the same value as a remodeled 4 bedroom house in the same neighborhood. Having granite counter tops and titled floors is no more valuable than formica counter tops and linoleum floors. A larger house in a postal stamp sized lot is more valuable than smaller house on a larger property. Not to mention that the information they have is often incorrect and outdated. For my own house, it lists the exterior siding as wood and it's vinyl, and the square footage comes up as 3050 and it's more than 3,500. For the owners estimate, I entered the cost of the geothermal system as an improvement, and zillow for some reason deducts this amount from there value estimate. Improvements to a property should add to the value, not deduct from it. A smaller house in my town, on a smaller lot, that has the parkway in the backyard (major highway in the state) is more value than my house which is on a lonely country road, bigger lot, and more square footage. The main reason is probably because the square footage information for my house is clearly wrong, but also living within 200 feet of a super highway has no bearing of value estimates.

Anyone claiming these value estimators are total junk is just completely wrong.

They are very good for a laugh.

The estimator probably has some use though.

If you're wondering what other houses in the area are going for and how this compares, this will probably give you a good indication. It might not estimate what the house is worth exactly, but that house in average condition, should be priced at roughly this value.

Take the estimate and then work out what isn't ordinary about the place. Does it look like it's roughly in the same shape as surrounding houses? Are they renovated, but this one isn't? Is it a corner lot? Is it too close to a busy intersection? Does it have a bad foundation? etc etc.

At least they've done the basic footwork for you. Comparing lot sizes, house sizes, etc with comps in the area.

It could help a person make some snap judgments about places, to limit their searches.

It's one of many tools that you can use, but probably shouldn't be the only one. If the house is in moderate condition and everything seems reasonable with it, then the estimator is probably a lot more accurate. If it's been remodeled and/or has serious issues, it's likely quite far off.

This guy makes sense on appreciation, and home values. (For a Realtor)
His logic makes provisions for when values are unsustainable. Which is basic common sense for crying out loud(What was so hard for MILLIONS of people to get?)
He doesn't offer up provisions to bench mark values for correcting bubble prices.

I think it's safe to use these guidelines and ignore 2000-on ward, and mark your own trend.
That would put you in a prudent ball park.

Real Estate Appreciation.
Where was this guy in 2001?

Tenouncetrout says

Real Estate Appreciation.
Where was this guy in 2001?

thanks, pretty good article.

These guys where everywhere.

Just like today, they're everywhere.

In 2015, we'll be pointing to all the "correct" people.

Of course there is a correct person for every angle.

Only a few people can actually nail down what is likely to happen consistently. My favorite would be warren buffet.

pkennedy says

Only a few people can actually nail down what is likely to happen consistently. My favorite would be warren buffet.

Off-topic: Like Albert Einstein, Warren Buffet is a superhuman genius and a miserable human being.

http://www.nytimes.com/2010/08/01/fashion/01Undivorced.html

Mr. Buffett separated from his wife, Susan, in 1977 but remained married to her until her death in 2004. All the while, he lived with Astrid Menks; they married in 2006. The threesome remained close, even sending out holiday cards signed, “Warren, Susan and Astrid.”

Come up with your own system and make a checklist and follow that checklist for EVERY property. Proprietary algorthym's do not share how the number are determined which is ridiculous. Keep in mind REO's and the number of homes in the process of foreclosure in the neighborhood (i.e. pre-foreclosure/foreclosure/bank-owned).

Keep in mind the purchase price based on tax records as well.

I also agree with Austinhousingbubble

Comps and sales histories will get you in the neighborhood, but I wouldn’t stop there. There are several basic metrics for arriving at the real value of a residence, (as opposed to going prices), including the type of land the house was built on, (clay, sandstone, etc), the size of the parcel, type of parcel, (corner property, greenbelt, right off the Interstate, etc), proximity to business centers/airports, flood histories, proximity to high power lines, processing facilities, any easements, etc. As for the structure itself; there’s the obvious like sq footage and layout, but keep in mind the foundation type, insulation, roof type and any age-related issues, (wiring, plumbing, potential asbestos issues, foundational issues, etc). Then there’s the abstract stuff, like is there an HOA, what’s the primary demographic, number of streetlights, sidewalks, cut-through traffic, crime-stats, school districts, number of weekly rentals, (a burgeoning trend), etc.

@kronicade
It's a good way to toss out obviously over priced properties. And if they aren't over priced, then they're by far the most expensive property in a given area. I don't think you've got to get that accurate when pricing out a home, you need to figure out a ball park figure and then hire a real estate professional to get the best pricing for the property, and they'll show you what you need to watch out for. Good, being the key here, and not someone who is just giving you a number to support a bank loan.

@Cautious1
The story goes far deeper than that. His wife left him for someone else. They never did divorce, she found someone who would be able to help him out (Astrid), keeping him company and keeping the house running. After his wife passed away, he ended up marrying Astrid. His house keeping skills are obviously very lacking and I believe always where. He's definitely a man of routines, working with what he has. Albert Einstein was a very interesting figure, and I've also read quite a bit on his life. They are very different people. Snowball, Warren Buffets book is really fascinating. It has very little to do with investing but really shows the character side of Warren Buffet. Warren Buffet ends up coming across as a master of numbers and understanding business, while having far more limited skills in living it large. Einstein's latest book (I can't remember the name) was super fascinating and actually changed him from a more aloof human to one with some paparazzi skills.

@kronicade
It's a good way to toss out obviously over priced properties. And if they aren't over priced, then they're by far the most expensive property in a given area. I don't think you've got to get that accurate when pricing out a home, you need to figure out a ball park figure and then hire a real estate professional to get the best pricing for the property, and they'll show you what you need to watch out for. Good, being the key here, and not someone who is just giving you a number to support a bank loan.

@Cautious1
The story goes far deeper than that. His wife left him for someone else. They never did divorce, she found someone who would be able to help him out (Astrid), keeping him company and keeping the house running. After his wife passed away, he ended up marrying Astrid. His house keeping skills are obviously very lacking and I believe always where. He's definitely a man of routines, working with what he has. Albert Einstein was a very interesting figure, and I've also read quite a bit on his life. They are very different people. Snowball, Warren Buffets book is really fascinating. It has very little to do with investing but really shows the character side of Warren Buffet. Warren Buffet ends up coming across as a master of numbers and understanding business, while having far more limited skills in living it large. He also avoids the spot light but LOVES talking about numbers and will talk to anyone who will listen. Einstein's latest book (I can't remember the name) was super fascinating and I actually changed my views on him from a more aloof human to one with some paparazzi skills.

PKennedy, do you think Warren Buffet has Asperger's? Thank you for the additional details, I was under the impression he didn't want to divorce due to the division of property complications. Please forgive my off-topicality.

@Cautious1
Snowball is one of my favorite books. He's incredibly fascinating. The book really shows his entire life from childhood to current. His relationships, what he's learned and what he's done. No great details on deals, but lots of information on how he changed over time. From running a paper route when he was a child to buying old pinball machines and splitting proceeds 50/50 with owners of establishments that would let him run them there. He understood that these people could buy these machines themselves and keep 100%, so he kept good relations with them. He would take the pile of nickels split it evenly and tell the owner to pick whichever side he wanted. He brought in a friend that was good with fixing machines and split his profits with him. He ran a gas station and learned the hardway that gas is a commodity and that loyalty means a lot. He couldn't compete with the family business across the street. His early childhood business adventures are pretty impressive and intriguing. He's an incredibly fascinating guy.