Baltimore Zillow Zestimates Still Off

Baltimore Zillow Zestimates are still often off from true value, despite the change in algorithms last year.

“Desktop Valuations” are a quick way to look at the potential value of a home, but they do not take many factors into consideration, and some of the things they DO use to determine a value should not be used!

I answer questions on the Zillow site, and so many times the questions come from a place of, “Why, in my townhouse community where the houses are very much the same, is my neighbor’s worth $XXX and mine is worth $45,000 less despite mine being an end unit with an additional bump-out?”

That is a very good question, and one that doesn’t have a good answer. The algorithm takes into account the taxes you pay and when the house last changed hands. If a house hasn’t changed hands in some time, the taxes generally are lower, and that would bring the “value” of that house down. That just doesn’t seem right, does it?

Next to this is an example of the “range” of value for one house I found. If a professional real estate agent walked into your house and told you they thought it might sell for somewhere between $391,000 and $740,000, would you feel comfortable that the agent knew your market?

How about the houses “for sale nearby.” Do these look like they belong together as a picture of a particular Towson community to you? They seem to be a random selection of homes that happen to be in the same zip code.

 

 

The biggest issue is the quality of the Baltimore Zestimates.

As you can see here, Baltimore Zestimates are within 5% of an actual sales price only 42.6% of the time. They are within 10% of an actual sales price 66.4% of the time. They are within 20% of a sales price 83% of the time. These are with a median error of 6.1%.

Think about what that means.

On a $400,000 sales price, the Zestimate may show $380,000 or $420,000 — but again, that is only 42.6% of the time.

To get above 50%, you have to go within 10% of the actual sales price. So on that same $400,000 house, a Zestimate 66.4% of the time will be from $360,000-440,000.

To get to the closer 83%, you have to bring that out to 20% of a sales price. That could drop the Zestimate down to $320,000. Would you as a Baltimore seller be happy with that if your house were truly worth $400,000? How about a homebuyer? Would a Baltimore homebuyer be happy to pay $480,000 for a house that is really worth $400,000? Probably not. And the buyer’s mortgage company most likely wouldn’t let it happen, because an actual appraisal would most likely be close to the true market value of $400,000.

And don’t forget — that is with a median error of 6.1%, or approximately $24,000 give-or-take, on that $400,000 house.

Real estate everywhere is LOCAL. Hyper-local even.

Baltimore real estate values can be different street-by-street!

For a true understanding of your house’s value, don’t count on automated valuation websites. Contact me for a true idea of you Baltimore house value. I’d love to help!

 

Would you like to know more and see additional Zillow issues in the Baltimore area? See my past posts on incorrect Towson Zillow Zestimates for details.

Upbeat Housing Outlook 2012

USA Today reports that economists, banking and building executives are thinking optimistically of the real estate market in the coming year, and that the housing industry may be finally close to hitting the bottom.

The article does clarify, though, that prices are still expected to drop in many areas, but there should be more home sales, and more houses being built, which are usually indicators of the beginnings of a recovery.

The reason prices are expected to fall in many areas would be due to the large number of foreclosures still out there. Many were delayed because of the “robo-signing” scandal last year, but will be moved forward this year.

The economy is an important piece in the housing recovery. Last month, the unemployment rate dropped to 8.5%, and 200,000 jobs were added. These are good signs for the economy, and housing usually follows economic recovery.

There are many factors that affect the housing recovery, and Baltimore real estate is extremely local. Some neighborhoods, like those I’ve noted in Towson home sales in December and Timonium December home sales, have seen some increases or at least stabilization.

Real estate is extremely local — as much as street-by-street or neighborhood-by-neighborhood.

To find out where your Baltimore house currently stands in the housing recovery, please contact me. I would be happy to help!

Baltimore County Most Expensive Home Sales 2011

Baltimore County real estate had a few high end home sales in 2011.

The five highest home sales in Baltimore County, according to MRIS, our local multiple listing system, included a few farms, and most had a large amount of acreage.

5. 905 Hayfields Rd, Cockeysville, MD 21030. $3,475,000. Listed and sold by Krauss Real Property Brokerage. This is a gorgeous newly-built home, that was finished around Summer 2011. Including the finished lower level, there are eight bedrooms, seven full and two half baths. It has 2.28 acres off a private drive, the home overlooking Hayfields Golf Course. Beautifully appointed, and spectacular views!

4. 2700 Butler Road, Reisterstown, MD 21136. $3,750,000. Listed and sold by Coldwell Banker Residential Brokerage. A “French Country Estate” home built in 2005, this is located up a hill and shared/private drive off Butler Road. Located on 53 acres, it has five bedrooms, 4 full and one half bath, and overlooks beautiful Worthington Valley.

3. 12757 Greenspring Avenue, Reisterstown, MD 21136. $3,900,000. Listed and sold by Yerman, Witman, Gaines & Conklin. This home was built in 1940, as is part of the “Vanderbilt Estate,” according to the listing. It is situated off a very private drive on over 138 acres. There are eight bedrooms, eight full four half baths. It boasts an in-ground pool, and it even has a bowling lane and full gym in the lower level!

2. 7309 Brightside Road, Baltimore, MD 21212. $4,200,000. Listed and sold by Coldwell Banker Residential Brokerage. This spectacular home was built in 1880, and has been gracefully and exquisitely restored. I have been in this house a few times, and it is truly gorgeous. It showcases 11 fireplaces (yes, 11!), seven bedrooms, six full and two half baths. It has 5.46 acres in the 21212 zip code!

And the highest sale in Baltimore County for 2011:

1. 2509 Butler Road, Reisterstown, MD 21136. $9,500,000. It was listed & sold simultaneously by Krauss Real Property Brokerage, which is why there are not many details or photos about the home. It is situated on 144.49 acres near the Falls Road Corridor, and looks to be a working farm, with rolling acres, animals, and convenient location. It has four bedrooms and seven full baths.

Much of Baltimore County real estate has been holding its’ own, despite the downturn in many areas. Each neighborhood is VERY different, so general overviews are not good indicators of your value. Contact me for more details on your Baltimore County house value. I would be happy to help!

FHA Loan Limits Remain High

The loan limits for FHA are at a decent amount, thanks to Congress voting to reinstate the loan limits that had been in place before, but had lapsed.

Currently, the limit for an FHA mortgage in Baltimore County is $560,000. That was due to drop down to $494,500, which could have really hurt Towson house values, since there are many in the $500-$550,000 price range!

The reason this could hurt Towson house values, is that a buyer would have to get more of a downpayment (it could be 20% or more!), and get what is called a JUMBO loan, which generally has higher interest rates than standard Conventional or FHA loans. The loan limit for standard Conventional loans is $417,000, a large drop from the FHA limit.

There are many buyers who do not have 20% to put down on a house, in order to qualify for a Jumbo loan, which would leave them most likely unable to buy a house above either the FHA loan limit, or the lower Conventional loan limit.

I wrote about the potential issue of a Baltimore FHA loan limit drop in June, and used this possible example:

Today, you meet with a REALTOR(R), and after meeting, you determine that your house is worth around $525,000. A qualified buyer using FHA secured financing can currently buy your home.

As of October 1, 2011, that same buyer would not be able to buy your house. What do you think would happen? Might their best & highest offer be $494,500, then, since they need FHA secured financing?

These extended limits are not forever, so make sure you know what the limits are when you list your home.

For professional, knowledgeable Towson real estate needs, contact me!

Strange Things That May Hurt Your Baltimore House Value

There are some things about your Baltimore home that you may have gotten used to, or don’t bother you, but could affect your house’s value.

Recently there was an article on MSNMoney where they tackled a few of these things.

Your house is different from the majority of the houses around you. If yours is the largest in the neighborhood, your value would be affected by those smaller homes around you. Buyers who are looking for that bigger home would tend to look elsewhere. Add onto that, appraisers would typically assign your home less $$ per square foot than other homes like yours in different neighborhoods.

This also comes into play with improvements. If you have put a lot of money into kitchens and bathrooms, but the neighboring houses have not, then you most likely will not get the money you put into it back when you sell.

You are missing a family room or bedroom. This goes along with “your house is different,” because if you only have three bedrooms but the others around you have four, this will affect who may look at or buy your house. Buyers have come to expect certain things from certain neighborhoods, and if your house doesn’t have what they expect, it could hurt your value in the long run.

Your house is a mish-mash of styles and updates. Your refrigerator broke so you decided to get a stainless one because it would look better over the long run. The problem is if you still have a white dishwasher, a black & white stove, and black microwave, it doesn’t show well. It could very well look like your appliances are starting to fail, and that could be the assumption a buyer makes.

Your home is showing its’ age. Are those floors really getting beaten up? Is your 50 year old front porch looking it? Those could affect value both in resale and in appraisal.

Neighbors. Some of that goes with improvements — if your neighbor tends to decorate the outside of his or her house in loud colors and designs, or leaves trash or junk around, it definitely can bring your value down.

Your Home Owner’s Association (HOA). Many HOAs make their communities better places. They make sure the outsides of houses look good, yards not a mess, and ensure that the neighbor issue from above don’t happen. Some, though, can be very strict, and that can hurt values. Why? If there are lawsuits going on, it could look like trouble. Add onto that, in the long run, it is usually the association’s dues that pay for the lawsuits….so some could worry that their dues would rise.

Your tax assessment is wrong. If square footage, number of bedrooms, or other issues are there, it could affect an appraisal on the property.

So be aware of these items that could affect your house’s value. Remember that buyers are often looking for a home, which includes the neighborhood, neighbors, and surrounding areas. Contact me for ideas on your Baltimore house value, and what you may be able to do to better yours!

Why Did My House Appraisal Come in Low?

Why did my house appraisal come in lower than contract price?

Even with comparable sales to your contract price on your house on record, if there are other homes in the area that have sold for less since then, that says to an appraiser that values are dropping in the neighborhood.

An appraiser’s responsibility is to the buyer’s bank, to show to the bank that if they had to foreclose, the value would be there to resell it.

If he or she interprets the market to be declining, it is his or her obligation to report it that way.

If there is a long time between the contract date and the settlement date, it can make this issue more prevalent, so be aware of settlement dates more than 60 days out. Appraisers right now are looking at data generally less than four months old. If your house goes under contract, and settlement isn’t due to happen for 90-120 days, then you really don’t know what the market will tell the appraiser, and you run even more of a risk.

What can you do to prepare for an appraisal?

If you have done a lot of work to your house that is outstanding and sets your home apart from others, make sure to have those receipts, so your agent can make copies of them to give to the appraiser.

Make sure your house looks good when the appraiser is due to come through. Appraisers do understand that you are moving, so some boxes are expected, but a nice, clean house helps!

Be sure to keep up on what is happening in your neighborhood even after you go under contract. Those list prices and sales WILL affect your value!

Having a professional real estate agent to guide you through this tough market is very important. Contact me for Towson real estate needs!

Foreclosure Backlog Could Lower Baltimore House Values Further

The foreclosure backlog is large, and with foreclosure filings up 33% in August over July, analysts think the real estate market has yet to hit bottom.

What does this mean for Baltimore real estate?

Well, it could mean that Baltimore house values could see further drops.

As more foreclosures come on the market in any area, the surrounding houses often see values drop. Technically, these “distressed” properties are not used as “comparables” for appraisal purposes, but the buyers/consumers see value in their own light.

Put yourself in a buyer’s shoes. Let’s say there are 30 houses on the market in one Downtown Baltimore neighborhood. 15 of those houses are foreclosures or short sales, so they are at a reduced price. Let’s say of those 15, three of the foreclosures are in decent condition, need little work, and were rehabbed just seven years ago.

Buyers are savvy and know that the banks will often negotiate on price if there are not many offers on the table.

Why would they buy a more expensive house in the same neighborhood if they can get a deal on that one?

Yes, there are some buyers who need to find homes that are in good condition due to their type of financing, especially if using the CDA program and an FHA insured loan. That buyer, though, will not be willing to overpay (and due to their loan type cannot overpay since their appraisal must come in at the contract price!) and can wait for another deal. With a large number of houses on the market, they have plenty to choose from.

With the foreclosure filings up, this still doesn’t include those in the early stages of the foreclosure process, according to RealtyTrac and a NASDAQ article.

Baltimore home sellers need to price their homes aggressively to get them sold, and stage them to make them stand out. Contact me for help. I know how to get your Baltimore home sold!

Buying Into Baltimore Homebuying Fair East 2011

The Buying into Baltimore Homebuying Fair for the East side is this Saturday, September 10, 2011 from 8:30am-2pm.

The event begins at Mergenthaler Vocational Technical High School (“Mervo”) with Check-in and Neighborhood tour sign up from 8:30-11am. There is a $10 per person charge to participate.

Home buying classes are 9-11:00am, then 11am-1:15pm are the neighborhood tours. Participants must visit at least four of the houses to qualify for the award.

What is the award? A $4,000 forgivable loan that after five years doesn’t have to be repaid, if you still live in the property you buy using that money as the primary owner.

How do you know if you qualify?

From the Live Baltimore website:

How do I get the $4,000 award?

You will be eligible for the award funds if all of the following conditions are met:

• A current homeownership counseling certificate is required. Counseling must be completed BEFORE signing a contract of sale. Click here for a list of housing counseling agencies.
• You must use this home as your primary residence.
• You close on your new home within 90 days from the event date. Contracts signed prior to the event will not be eligible for the award funds.
• Your property is within the fair boundaries.
• Your mortgage amount cannot exceed $417,000.
• You are encouraged to use a Fannie Mae or Freddie Mac approved lender.
• You must invest a minimum of $1,000 from personal funds/resources.
• Purchase contracts must be signed and dated after the “Buying into Baltimore” event, not before. Contracts signed prior to the event date will not be accepted.

You must be one of the first 50 people to meet these qualifications and submit your validated/stamped ticket, proof of homeownership counseling, signed contract of sale & photo ID to Baltimore Housing, Office of Homeownership (417 E. Fayette Street, Suite 1125, Baltimore, MD 21201).

The boundary/dividing line is:

Boundary dividing line:

Starting from the North (Baltimore City/Baltimore County Line)…

• Head South on Charles St.
• To West on 29th St.
• To South on Howard St.
• To West on Camden St.
• To South on Russell St. and continue to County Line

So if you are considering buying a house in East Baltimore City, contact me to learn more!

 

Baltimore FHA Loan Limits May Drop in Fall

FHA loan limits across the United States had been set at a higher level to help the housing market from further decline, and in September 2010 that was extended through September 2011.

The current loan limit in Baltimore County, Baltimore City, and Harford County is $560,000 for an FHA loan. This means that you can get an FHA loan of up to $560,000 for a house in Baltimore.

If the loan limit extension is allowed to expire, then that limit will be dropped to $494,500 (a drop of $65,500!)

When I think of the Timonium housing market, or Towson house values, many homes are in the $450-550,000 range, and if this extension were to expire, those from $500-560,000 no longer would qualify for FHA financing, which could hurt homesellers in a big way.

Many Towson homebuyers do not have a large percentage to put down on a home, and would need the low 3.5% downpayment program that FHA has to offer. If the loan limits drop, this could bring house values down. How?

Here’s a possible example:

Today, you meet with a REALTOR(R), and after meeting, you determine that your house is worth around $525,000. A qualified buyer using FHA secured financing can currently buy your home.

As of October 1, 2011, that same buyer would not be able to buy your house. What do you think would happen? Might their best & highest offer be $494,500, then, since they need FHA secured financing?

So what can you do? Read more details and information about the bill from the National Association of REALTORS(R). Find out who your local representatives and senators are here, and make your voice heard. Tell them that “H.R. 1754 has been introduced in the House by Reps. Miller (R-CA) and Sherman (D-CA) to make the current limits permanent. No similar bill has yet been introduced in the Senate” and that this bill needs to pass!

Baltimore Home Sellers Named One of Most Stubborn

Fortune.com recently had an article discussing the large price drops in most cities due to the bubble burst of the real estate market.

In the article, Nin-Hai Tseng used a Trulia.com report to discuss house pricing trends across the US:

f you’re a buyer or seller, here’s what to expect this spring: Detroit, with an average discount of 19%, led with the nation’s deepest price cuts during the initial listing, followed by other foreclosure hotspots including Miami, FL with 11%, Columbus, OH with 11%, Baltimore, MD with 10%, and Atlanta, GA with 9%.  Since these areas are already gravely depressed, the deep cuts could likely have long-lasting impacts on future home values.

The cities with sellers who didn’t cut deep enough during the first go-around and will most likely have to cut deeper are Phoenix and Mesa, AZ, Jacksonville, FL, Baltimore, MD and Chicago, IL.

What this says is that in general, many Baltimore home sellers are pricing their homes too high for the market to bear. Buyers are not responding, so the sellers lower their prices. When they are not lowered enough, and buyers still don’t respond, they reduce again. This, according to Fortune.com, makes Baltimore home sellers as a group one of the more stubborn, since they have to reduce more than one time before a sale.

To facilitate a quicker sale, many homeowners can price “ahead” of the market. This means lower than the other average sales in the neighborhood, because in many areas, prices are still declining. Houses that sell faster tend to sell for more than comparable homes who overpriced their homes at the beginning.

Hopefully our “stubborn” sellers will be stubborn no more!

For Baltimore real estate needs, make sure to contact me. I can help guide you in the right direction!

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