Zillow and housing prices

I remember back on June 27th that someone named Slashchick wrote that we’d never sell our house for more than Zillow listed it for. And, if we did, it would have taken weeks or months.

Long story short: she was wrong. It sold in four days. For way more than Zillow was listing it for. (We didn’t want to jinx the sale by blogging about it, but everything is pretty much finished up now, so I can blog about it finally).

This gets to something that I’ve noticed. Many bloggers and commenters are pessimistic. I’m an optimist! Well, that, and we have a real estate agent who looks out for us.

Remember how we bought this place? We were going to Stan’s office to sign papers to buy another house. Maryam had looked at 50 houses back three years ago. When we got there he said “another place just came on the market and I think you should see it.”

He didn’t go for the quick and easy sale. He didn’t need to do that, he already could feel his 3% lining his pockets. But, he decided to do some extra work. Something Maryam and I have always appreciated about Stan.

Anyway, that turned out to be a HUGE windfall for us. This house went up in price much faster than the other place we were thinking of buying.

It sold for almost what we were asking for the house (in the $440,000 range — Zillow listed its value as $414,000 — we bought this house for $295,000 three years ago). One thing Zillow can’t show is how much was invested in the house after buying. We put thousands of dollars in the house in repairs and upgrades.

Other houses in our neighborhood have not sold as fast. The market is switching from a seller’s market to a buyer’s market but some markets remain hot. If you have a great house that the market wants it’ll pay the price. Stan knew that because he knew our market. If I tried to sell myself I probably would have just asked for Zillow’s price, which would have been a mistake. One thing I learned in the camera store I used to work at: it’s very easy to lower your price, it’s nearly impossible to raise it.

Down in Silicon Valley I know a guy who just got into a bidding war over a house (he won, but paid FAR above the original asking price). So, even in “over priced” California the housing market is still strong.

Why did our house sell? Well, it had all the attributes that home buyers look for. Quiet street. Roomy. Great yard. Curb appeal. Nice neighbors.

So, why did we get a house in Half Moon Bay and pay WAY UNDER Zillow’s estimated price? We bought that for $900,000, where the owners were asking $930,000 and Zillow said it should sell for $1.127 million.

We win on both sides of this deal.

Why didn’t the owners of that home get what they wanted? Well, because the Half Moon Bay house was put on the market in the summertime. There’s a few things you should know about that. First, the heat in the valley pulls in ocean air. That means fog. Cold. Wet. We ignored that.

Second, there’s a major road into the Half Moon Bay area that’s out right now (Hwy 1, which is out at Devil’s Slide until late September). So, that means traffic. Traffic. Horrible commutes. We ignored that too.

But other buyers didn’t.

Oh, how did we find that house in Half Moon Bay? One of Maryam’s best high-school-friends, Katherinne Garzon, is now a real estate agent. She was looking for the best housing investments for us in the San Francisco area. She also encouraged us to low-ball our offer and see what happens. We held back our enthusiasm for the house (it was the first and only house I looked at because I fell immediately in love with it) and knew we were playing a game of chicken. If another buyer had showed up we would have lost that game. I’ve learned to listen to the professionals, though, and it all worked out.

Aside: I see George Ou talking about the heat and power problems that they are having in Silicon Valley right now. I can see nuclear power in our future. The pressure on the system to keep supplying us with cheap power is going to be extreme. We’ve gotten addicted to our computers and our air conditioners and our HDTVs.

Anyway, I’ve come to appreciate the Zillow blog. It’s informative, well written, and I love the heat maps. Not the temperature, but how “hot” a market is.

But, the lesson here is that Zillow’s prices are a guideline and you shouldn’t take them as gospel. Real prices will vary by neighborhood and, even, by house as we’ve found.

Personal note to Slashchick: stick to your day job. :-)

We’ll miss Bothell. I definitely have mixed emotions today.

133 thoughts on “Zillow and housing prices

  1. Zillows estimates are meant to be estimates and not guaranteed values. I have seen both sides where there prices are completely too high and completely two low. There are a lot of variables they don’t take into effect when calculating values.

  2. Zillows estimates are meant to be estimates and not guaranteed values. I have seen both sides where there prices are completely too high and completely two low. There are a lot of variables they don’t take into effect when calculating values.

  3. When it comes to selling real estate, one of the biggest obstacles sellers face is a so-called “depressed” market. Even when a property is highly desirable, it can be hard to get the price you want in this real estate environment. You could end up losing a lot of time, money, and opportunities, waiting for a “perfect buyer” who may NEVER materialize!
    The traditional solution is to drop your asking price. But this common strategy doesn’t always work in your favor. In fact, it can work against you, making your home seem undesirable and your position seem weak.

    But there IS a way to turn this challenge into a profitable opportunity! I am trying to let every Realtor know that I can increase your sales and my bottom line. It does not cost anything. Please visit our BLOG for more information. I am not selling anything. I am in the business of paying cash for mortgage notes and trust deeds.
    http://realestatefunding.smilingdogenterprises.com
    http://twitter.com/sgriecci

  4. When it comes to selling real estate, one of the biggest obstacles sellers face is a so-called “depressed” market. Even when a property is highly desirable, it can be hard to get the price you want in this real estate environment. You could end up losing a lot of time, money, and opportunities, waiting for a “perfect buyer” who may NEVER materialize!
    The traditional solution is to drop your asking price. But this common strategy doesn’t always work in your favor. In fact, it can work against you, making your home seem undesirable and your position seem weak.

    But there IS a way to turn this challenge into a profitable opportunity! I am trying to let every Realtor know that I can increase your sales and my bottom line. It does not cost anything. Please visit our BLOG for more information. I am not selling anything. I am in the business of paying cash for mortgage notes and trust deeds.
    http://realestatefunding.smilingdogenterprises.com
    http://twitter.com/sgriecci

  5. I see I’m not alone in the apprehension of Zillow, and need for dating russian women :) (comment spam above)

    I use HouseFront to find values, and can access on my cell too. The seem to use MLS or something to make it more accurate.

  6. I see I’m not alone in the apprehension of Zillow, and need for dating russian women :) (comment spam above)

    I use HouseFront to find values, and can access on my cell too. The seem to use MLS or something to make it more accurate.

  7. Zillow “Guess-Idiots” appear to rely on public tax records that in some cases haven’t been updated in twenty-five years. The zestimator is a sketchy tool to rely on. I believe it’s best to use a Professional Realtor when appraising property.

  8. Zillow “Guess-Idiots” appear to rely on public tax records that in some cases haven’t been updated in twenty-five years. The zestimator is a sketchy tool to rely on. I believe it’s best to use a Professional Realtor when appraising property.

  9. “Guess-Idiots” at Zillow use outdated public records to formulate real estate valuations. They call those wild calculations – Zestimates. I thinks it’s best to use a trained professional appraiser.

  10. “Guess-Idiots” at Zillow use outdated public records to formulate real estate valuations. They call those wild calculations – Zestimates. I thinks it’s best to use a trained professional appraiser.

  11. Zillows Zestimate is very inaccurate and really a waste of time. If you are the type that is looking for an accurate tool, as good as you can get without a REALTOR, then the Market Insight valuation tool is the ultimate. It is based on up to date MLS data and has virtually wiped out Zestimates. Why waste your time with an inaccurate tool?

    As for the rest of the site it has now turned into a for sale by owner website which is unfortunate as these sites pop up and disappear constantly. Now that the Zestimate is known to be such a poor tool Zillow has nothing left of value to offer unless you are into gimicky features.

    Zillow is the new dot bomb heading into 2007; shame as it had a chance to carve out a little segment of the business to survive in but this Frink guy doesn’t understand the business.

  12. Zillows Zestimate is very inaccurate and really a waste of time. If you are the type that is looking for an accurate tool, as good as you can get without a REALTOR, then the Market Insight valuation tool is the ultimate. It is based on up to date MLS data and has virtually wiped out Zestimates. Why waste your time with an inaccurate tool?

    As for the rest of the site it has now turned into a for sale by owner website which is unfortunate as these sites pop up and disappear constantly. Now that the Zestimate is known to be such a poor tool Zillow has nothing left of value to offer unless you are into gimicky features.

    Zillow is the new dot bomb heading into 2007; shame as it had a chance to carve out a little segment of the business to survive in but this Frink guy doesn’t understand the business.

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  15. But, the lesson here is that Zillow’s prices are a guideline…

    To me, it seems the lesson is that it’s who you know, not what you know. Human relationships (between you and your agent, you and your network) are what drive everything. That’s why social software is such a big deal (though we’ve barely scratched the surface) and why it’s so maddening when you look up office furniture and get stores. The web is still just a big, dumb library full of “books.” What it needs to become is a big, smart library full of books that understand their relationships to each other and to the people that use them.

  16. But, the lesson here is that Zillow’s prices are a guideline…

    To me, it seems the lesson is that it’s who you know, not what you know. Human relationships (between you and your agent, you and your network) are what drive everything. That’s why social software is such a big deal (though we’ve barely scratched the surface) and why it’s so maddening when you look up office furniture and get stores. The web is still just a big, dumb library full of “books.” What it needs to become is a big, smart library full of books that understand their relationships to each other and to the people that use them.

  17. Interesting reading all the comments on real estate and Zillow. My own story is kind of interesting. After living in L.A. for decades and leaving the advertising and entertainment business, I decided to move to, of all places, Bullhead City, Arizona! I had been visiting the Laughlin, Nevada area for many years and there was just something about this strange river gorge and river valley area 90 miles south of Las Vegas with the Colorado River splitting this twin-city, dual-state area. It was early 2003, and my elderly fatrher, who I had been caring for in L.A. had passed away a few months earlier. I had some cash saved, and inherited a decent piece of change from my father’s estate. At that time, prices in Bullhead City (just across the river from Laughlin) were incredilby low! In fact, after taking a serious hit in the spring of 1990, prices remained totally flat for THIRTEEN YEARS! I had moved to the area just after Thanksgiving 2002 and was living in casino/hotels in Laughlin while diligently and tirelessly shopping for the perfect placeBullhead. It was still a buyer’s market. Prices were so low, but even still you could negotiate a price a few thousand dollars under the asking price. I bought a beautiful, three year old 3 bedroom, 2 bath split floorplan home on over a quarter-acre lot on a cul-de-sac for $139,000! ($6,000 under the asking price). We closed in April 2003, and the VERY NEXT MONTH, the long anticipated rise in prices in Laughlin/Bullhead roared into gear! Just two years later, my home more than doubled, appraised back in April for $335,000 (still a bargain compared to California, I might add). A couple months after I bought the home, I contacted the owner of the lot next door to my home after moving in, I bought the vacant lot next door on the cul-de-sac for $22,000. Vacant land had just started to appreciate as well, but the owner of the lot didn’t have a clue and was sick of holding on to a lot that he bought for over $25,000 and had depreciated to $18,000 and not come back up in value. He was glad to get rid of it. Last month I was offered $155,000 for the land! After a wild three years, prices have now, not surprisingly, leveled off in the area but are by no means going down becaue they are still very cheap compared to California and so many retiring baby boomers are moving to “all points Arizona. Regarding Zillow, in my case, pretty darn accurate, once I entered the proper infomration regarding features, upgrades and the like. Zillow’s “zestimate” came in at $325,000, about $10,000 below the professional appraisal. So there it is. Meanwhile, am loving life in this offbeat part of the Mohave Desert (despite the extreme summer heat and VERY long commute to the Bay Area!) Just another crazy real estate story that some may find interesting. Hey, Robert, looking forward to meeting with you in Menlo Park next week!

  18. Interesting reading all the comments on real estate and Zillow. My own story is kind of interesting. After living in L.A. for decades and leaving the advertising and entertainment business, I decided to move to, of all places, Bullhead City, Arizona! I had been visiting the Laughlin, Nevada area for many years and there was just something about this strange river gorge and river valley area 90 miles south of Las Vegas with the Colorado River splitting this twin-city, dual-state area. It was early 2003, and my elderly fatrher, who I had been caring for in L.A. had passed away a few months earlier. I had some cash saved, and inherited a decent piece of change from my father’s estate. At that time, prices in Bullhead City (just across the river from Laughlin) were incredilby low! In fact, after taking a serious hit in the spring of 1990, prices remained totally flat for THIRTEEN YEARS! I had moved to the area just after Thanksgiving 2002 and was living in casino/hotels in Laughlin while diligently and tirelessly shopping for the perfect placeBullhead. It was still a buyer’s market. Prices were so low, but even still you could negotiate a price a few thousand dollars under the asking price. I bought a beautiful, three year old 3 bedroom, 2 bath split floorplan home on over a quarter-acre lot on a cul-de-sac for $139,000! ($6,000 under the asking price). We closed in April 2003, and the VERY NEXT MONTH, the long anticipated rise in prices in Laughlin/Bullhead roared into gear! Just two years later, my home more than doubled, appraised back in April for $335,000 (still a bargain compared to California, I might add). A couple months after I bought the home, I contacted the owner of the lot next door to my home after moving in, I bought the vacant lot next door on the cul-de-sac for $22,000. Vacant land had just started to appreciate as well, but the owner of the lot didn’t have a clue and was sick of holding on to a lot that he bought for over $25,000 and had depreciated to $18,000 and not come back up in value. He was glad to get rid of it. Last month I was offered $155,000 for the land! After a wild three years, prices have now, not surprisingly, leveled off in the area but are by no means going down becaue they are still very cheap compared to California and so many retiring baby boomers are moving to “all points Arizona. Regarding Zillow, in my case, pretty darn accurate, once I entered the proper infomration regarding features, upgrades and the like. Zillow’s “zestimate” came in at $325,000, about $10,000 below the professional appraisal. So there it is. Meanwhile, am loving life in this offbeat part of the Mohave Desert (despite the extreme summer heat and VERY long commute to the Bay Area!) Just another crazy real estate story that some may find interesting. Hey, Robert, looking forward to meeting with you in Menlo Park next week!

  19. Keith, if you aren’t in real estate to make money, then you are in it for the wrong reason. I want a real estate agent to sell my house of the highest price possible. Because that will mean he will make as much money as he can. Otherwise, I’m wasting my money on that agent.

  20. Keith, if you aren’t in real estate to make money, then you are in it for the wrong reason. I want a real estate agent to sell my house of the highest price possible. Because that will mean he will make as much money as he can. Otherwise, I’m wasting my money on that agent.

  21. I hope that’s not true Matthew. As my first financial investor said “savings are great, IRA’s are fine, the stock market is necessary gambling – but your first and most important investment is a home, then houses.”

  22. I hope that’s not true Matthew. As my first financial investor said “savings are great, IRA’s are fine, the stock market is necessary gambling – but your first and most important investment is a home, then houses.”

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