how accurate are home values obtained online?

Factual Questions
1

Hello Everyone,

Four years ago I purchased a home, 4 bedrooms, 2 baths and a screened in in-ground pool with a spa for $135,000. When I purchased I truly thought I was buying at the bottom of the market as the home I purchased sold a few years before that for over $225,000. Well as usual, I was wrong. Over the years I watched the surrounding homes plummet in price even further.

However, the market does seen to be recovering some (Orlando, FL). In the intern I got married and my wife and I purchased a home on five acres, buying at a price I didn’t think we would ever see for acreage. We figured if we didn’t but now, we wouldn’t be able to afford acreage when the market got strong. This put us house heavy as I owned a home and so did she. Her house is rented out long term and covers the mortgage. We have a dream tenant who pays on time and cares for the home. Her home was valued over $300k at the market peak, but because of the foreclosures in the area we would be hard pressed to get $175,000 for it now. The best course seems to be renting it until the market recovers some more.

My home left us unsure of what to do. I could continue to pay the mortgage and rent it out. My mortgage is low enough that I could even turn a profit if a few hundred a month, but we decided to sell. Being a four bedroom with a pool made it desirable in the area and quite a rarity. I have only had it up for a month and have had several offers. I listed it at $134,000, figuring I would have to settle for $125,000, taking a loss, but not too bad of one. Well, today I had two people competing for the home and got a signed contract for asking price and they aren’t even asking for closing assist! Holy Crap, a literal dream come true. Could it be possible that I get out of the house with only a 1k loss? (plus the loss of commissions as well). Considering how many people are getting hosed I consider myself very fortunate.

Now, here is where I am feeling nervous. The house has got to appraise for the $134k for the deal to go through. I really don’t think the house will appraise for that, but if it comes close I can still walk away in a goods position, lowering the sales price to that of the appraisal. There have been some homes in the area comparable, selling for this price area, others not so much. I won’t know anything until the appraisal, but can’t help trying to get an idea. So I have been going to sites like Zillow that give an estimate of a homes worth. The info I am getting isn’t promising, so I am wondering how accurate are sites like Zillow in gauging s homes appraisal value? The county has appraised my home at $134,700 for taxes. Is Zillow a good indicator or should the info given be taken as fairly useless in determining an appraisal value.

Also, in this market does anyone else find it strange someone would offer full asking price? Thanks and I apologize for the long post, it seems I got carried away!

2

Your buyer may think he is getting a bargain. Who knows, perhaps he is. Don’t look a gift horse in the mouth.

As far as how accurate Zillow is, I’d say ‘it depends’. From my own personal experience I have seen it spot on, and I’ve seen it way off, depending on the neighborhood and the recent activity (or lack thereof).

But even if Zillow is accurate for your property, it doesn’t really matter since the appraiser is going to come up with their own value, based on the comps they find along with lots of other factors. I have seen appraisers with very conservative values these days, because that’s what the banks want. When they undervalue a house it can kill a deal that the buyer has agreed to. Just pray you get a fair appraisal.

3

Don’t sweat it. Your house should appraise.

Appraisals are both art and science. You might want to have your agent make sure the appraiser is informed there are competing offers at the price range you are accepting. While this not a factor in the technical valuation criteria it will make the appraiser think twice before pulling values too heavily negative.

The residential market is recovering, slowly, but it is recovering

4

Thanks for the replies. I have talked to several friends who sold real estate years ago. They told me not to worry as the appraiser will be aware of the oder price and if the home can be reasonably valued at the offer price, it will come in at that so the bank can go forward with the loan. I am not sure it is that easy any liner. Seems to me that is what caused this mess to begin with.

Secondly, does the appraised value for taxes have any bearing on the appraisal value the bank will give it? I do realize that taxed value can be very unrealistic, however the country uses professional appraisers so I would think there is some truth to their assessment.

5

Tax assessments are typically done on multi-year (often every three years for re-assessment) rolling basis and are often wildly inaccurate and out of date simply by their long term nature. The state or county tax assessment value of a house is the roughest and generally most inaccurate of guides.

6

Zillow lists our house for for far less than neighboring houses that aren’t as big or have the features we do. It seems to completely ignore having a full basement compared to a crawl space, for example.

Based on their estimate history, I think this has to do with us being smart and getting our property tax appraisal reviewed a couple years ago. Got a big cut in value at the right time.

They also list values for houses for sale in our neighborhood for tens of thousands more than the asking price. (Which may not be good for the OP if that applies there.)

7

Not necessarily. My sister had her home on the market for 145K (also in Orlando btw). She received a full price offer within days. The house wouldn’t appraise. Interesting the realtor told the buyer that my sister would obviously have to lower her price to the appraised value. No dice (and a few chuckles and oh reeealllyyys) and the deal didn’t go through. She has since had two more offers for 140K but because the buyers didn’t have the money to make up the difference, those deals didn’t go through either. She and her partner have decided to just sit tight for a while. They aren’t in any rush.

8

Here’s a thread from a couple of months ago regarding Zillow: How accurate is Zillow? - Factual Questions - Straight Dope Message Board

9

A four-bedroom house with a pool for under £85k? I know the Florida property market has been hit hard but that sounds insanely cheap from this side of the Atlantic, unless it’s in a realllly bad area (like, gangsters and alligators having pitched battles on the street, amid burning SUVs, Deepwater Horizon oil slicks and a constant hurricane). Where do I sign?

(Just for a laugh I searched for properties in this price range within 20 miles of where I live, and the only results were shared-ownership flats and the occasional one-bedroom retirement flats in grim-looking blocks.)

10

That’s more like pre-bubble prices 'round here. Fairly normal. We have more land area per capita here. Unfortunately, the flip side of that is this, along with lack of public transportation, although the Orlando area is pretty wired itself (but still doesn’t have light rail for a multi-million inhabitant metro area.)

11

So great, I get fast broadband and a half-decent train service to London, but have to pay almost three times that amount to buy a three-bedroom, 1,000sq ft house…

12

As mentioned up thread, the house before the market crash sold for over $225k The neighborhood isn’t bad, but isn’t real upscale either. Your typical middle class area. The house is nice, I completely revamped the interior with new wood floors and such. The problem is the foreclosures in the area, quite a few of them. From what I can see, judging from the previous owners of my home, many around here used their homes as ATMs, they had taken a second mortgage and had almost $275k out on the house before they lost it. So, the market just got swamped. In addition a home (3 bedroom, no pool) on the next street was a foreclosed home and sold for $93k However, the owners before they left trashed the inside and took everything that want bolted down and a few things that were. Of course that house took a huge hit, but it still reflects on the assessed value of everyone in the area homes. Quite sad actually.