Selling Arizona

Are Zillow estimates as accurate as you think they are?

The internet is a great tool to help homeowners to communicate the goings-on in the neighborhood. The internet can also let homeowners learn the value of their biggest asset, their home. Zillow has become a household name in the real estate community to let consumers know what is for sale in a particular area of interest or to provide an estimate on a home value. Zillow uses algorithms to come up with their estimates which they appropriately call "Zestimates".

Zillow provides Zestimates for over 100 million homes and their algorithms are based on both public data and user-submitted data. According to Zillow, “the vast majority of Zestimates are within 10 percent of the selling price of the home.” But Zestimates are only as accurate as the data behind them, so if the number of bedrooms or bathrooms in a home, its square footage or its lot size are inaccurate on Zillow, the Zestimate will be off. Users can correct these mistakes. However, Zillow cautions that updating a property’s details won’t result in an immediate change in the home’s Zestimate, and sometimes it won’t result in any change at all.

Along with accepting user-submitted data, Zillow deals with the inaccuracy problem by reporting estimated value ranges for individual properties. The smaller the range, the more reliable the Zestimate is because it means Zillow has more data available on that property. Looking at the high and low end of the range will give you a better sense of a home’s possible worth.

Zillow factors the date and price of the last sale into its estimate, and in some areas, these data make up a big part of the figure. If this information is inaccurate, it can throw off the Zestimate. And since comparable sales also affect a home’s Zestimate, a mistake in one home’s sales price record can affect the Zestimates of other homes in the area.

There are many other factors which are not recognized by Zillow such as home improvements, extra room additions, etc., etc... All of these factors can add tremendous value which are not recognized. For example, Zillow algorithms can't see that your home was completely renovated with a newly remodeled kitchen and bathrooms and your neighbor is still using a "Brady Bunch-era" kitchen, circa 1972.

Unfortunately, Zillow has created a huge hurdle for professional real estate agents to overcome since many consumers take Zillow Zestimates as gospel. It can be quite a hassle talking clients off the ledge while explaining to clients a true calculated value of their home. This is about the time when homeowners pull their phones out and tell the agent, "Oh No! That can't be right, Zillow says it's worth this amount of money....."

Although information is power, the wrong information can be harmful. Most homeowner's are unaware that if a home is listed above it's actual true value, it could sit on the market for a long period of time, where it will eventually become stagnant. When a house becomes stagnant, it will have to have a drastic price drop to get the action it needs to sell, which is the opposite effect than what was desired by the seller.

Although Zillow has pretty good algorithms, the are too many factors which compromise the accuracy of their estimates. The only way to get a true and accurate price to sell a home is to hire a professional real estate agent or an appraiser.

YIKES! I bought a Haunted House!

Since Halloween is this week, I thought I would write a story about homeowners buying haunted houses, unbeknownst to themselves. Most homebuyers who claim to live in a haunted house say they didn’t know their house was haunted until after they moved in. What makes a house haunted? Strange noises and shadows are the spookiest occurrences reported by homeowners. Almost 50 percent of homeowners said items inside the house shifted on their own, certain rooms felt haunted, felt touched by someone or something, and some said their home had hot and cold spots.

Moving into a new home is a really exciting time, but finding out that your new abode has an unwanted guest can definitely put a damper on the celebration. Every once in awhile I run into homebuyers with stories of how they unknowingly moved into a haunted house, and even more so by how many people knew and decided to move in regardless. I've found that some people are okay living next to a haunted house, most people are against the idea of living in one. Boo!

#mikeblackrealtor

4 Outdoor Projects That Add Value To Your House

You can add value to your home by doing outdoor enhancements. These are a few things you can do to add value.

1) Lawn Care-200% If you pay $500 per year it should double your money to $1000.

2) Outdoor Kitchen-100% Install a permanent grill and fridge for approx. $15,000 and recoup $15,000.

3) Whole Landscape Upgrade-100% Install a new paver walkway, planters, trees and shrubs for another recoup of 100%.

4) Patio-95% Install a new patio for $10,500 and recoup $10,000.

Not everything with home value involves the interior. #mikeblackrealtor

New Home Buyer Cancellations In Phoenix

Let's start off with a quick school lesson. Economics 101-When a President spends like a teenager with a credit card, you are going to have inflation. The Feds have to raise rates to cool down the rate of inflation. In turn, rising interest rates lowers the mortgage amount that consumers can afford.

The latest numbers show permits for new homes fell more than 20 percent in February. Homes that were resold also dipped more than 11 percent. Last year the average base price for new homes was $386,000. This year the median closing price was $267,000. Buyers are now cancelling their contracts because they cannot sell their existing homes in the slowing resale market. To be honest, the market is finally normalizing and leveling out.

There is still lots and lots of activity out there because there is still a shortage of land. #mikeblackrealtor

Rising Rates Are Scaring Investors

As mortgage rates rise, buyers can afford less and less of a home. Because of this, prices begin to drop and real estate investors can't flip houses as easily as previous years.

Due to the rising rates and lowering prices, investors are turning the homes into rental properties. This all sounds like it will be a better situation for the first-time home buyer, but ironically not. Since these homes are being converted to rentals rather than reselling, this turns an already low inventory level to an even smaller one.

Hopefully, if investors continue to pull back, inventory rises and home prices begin to lower, some buyers could be in a good position to buy.
So good luck with your home search. #mikeblackrealtor

Housing Inventory Shrinks

Housing inventory has dropped to it's lowest levels in decades. In December 2021, inventory was already at a low mark of 1.7 months of supply and now it has dropped to 1.6 months. Not much to choose from if you are currently searching for a home. Good Luck! #mikeblackrealtor

Calm Market Ahead

Housing sales have skyrocketed the last two years. In 2021, home sales reached 6.12 million, which is the highest since 2006. The median home price has reached an all-time high of $347,100, which is a one-year gain of 16.9%. Prices will continue to rise, but will rise at a more stable rate of 3% to 6% per year for 2022 and 2023. #mikeblackrealtor