Elizabeth Weintraub
Can You Rely on Zillow for an Estimate of Market Value?
Part of my job is to explain market value and how an appraiser will substantiate market value to a seller, none of which are remotely connected to the website Zillow. Most of the time I’m able to make sellers understand, but as a Sacramento real estate agent, I also get those who don’t care how long a home sits on the market (and loses its desirability with each passing day), and there’s not much I can do about those attitudes but go with the flow. After all, it’s not my home. It’s not my job to make that listing my home, even though I may care deeply about whether it sells.
One of my clients shared with me recently that his accountant told him Zillow is 10% underpriced with its Zestimates. I didn’t think anything of that statement — because it’s ridiculous — until I realized that there are people who actually believe it. Not anybody in my circle of real estate agents or appraisers or other real estate professionals, but the public thinks because Zillow notes an estimate on a website, it must be true. After all, they found it on the Internet.
The basis for that statement were two homes his accountant saw that had sold for 10% more. Therefore, my seller’s accountant must have automatically leaped to that conclusion, which doesn’t say much about his accounting skills now, does it? My own home is priced $150,000 more than its worth in Zillow. That’s certainly not 10% of its value. It’s widely known that Zillow estimates are all over the map and often there is no set correlation to value. That’s because it’s a computer-generated algorithm that isn’t even as reliable as something like Realist or Metrolist comparables, which still require a human touch because square footage isn’t enough. You can’t price a home on square footage alone just like you can’t live on cans of tuna fish.
Zillow is getting better but it’s just not there yet. It’s great for looking at maps and playing around but it doesn’t have all of the homes for sale much less an accurate value.
Zillow doesn’t know if that home sits on the edge of a cliff overlooking the ocean or if it’s nestled next door to a mobile home park. It doesn’t know if the floors are marble or dirt. It doesn’t know if planes fly overhead ten times a day. It doesn’t know if the guy next door fixes motorcycles in his front yard. It doesn’t know if the plumbing has been updated or if water trickles into the sink at the rate of two drops a minute. It doesn’t know if the home is close to a desirable school or a military base. It doesn’t know if the buyer will walk in the front door and fall in love or turn around and run. Quite frankly, Zillow doesn’t know crap.
Which is why a seller will always need a professional and experienced Sacramento real estate agent, and we’ll never go out of style.
Astonishing 2014 California Real Estate Laws in the Works
This year is shaping up to be an interesting year for new 2014 California real estate laws, which will affect us in Sacramento. For so many years the new laws have been more narrow, but this year will be different. In some ways, you’ve got to wonder why our California Assembly members had to propose some of these new real estate laws, and the answer is because they don’t (shudder) exist or our present laws are unclear. It’s enough to make some of us feel like dropping out and engaging our brains elsewhere such as searching for a Pinata Party during Plants vs. Zombies, or throwing a sheet around our waist and dancing through the house yelling toga, toga.
Let’s look at AB 1513, the so-called Squatter’s Bill. This is a piece of legislation that will allow law enforcement officials to remove unwanted persons from your vacant property. That’s right, under current law, a vagrant can break into your home, set up shop and you can’t immediately throw them out. They can party away like in Animal House for 30 to 60 days while you helplessly look on, dangling a piece of paper that says you’re entitled to an unlawful detainer. Well, I probably could get them out. As a Sacramento real estate agent, I have once resorted to banging loudly on the door and screaming FBI, I hate to admit, and then listening for the back door to slam as the squatters scatter like rats.
Another is AB 2039, targeting auction companies such as Auction.com, which is owned in part by a former third-party vendor company that processed short sales. This company has partnered with bad-mortgage purchasing companies such as Nationstar and forces real estate agents to allow this company to take over the transaction — kind of like a squatter, you don’t want them but you can’t get rid of them. This legislation would at least hold the real estate agent harmless from the actions of the auction company.
It boggles my mind as to how these auction companies are successful anyway. Because a buyer must pay a 5% premium to the auction company (on top of the commission) to buy the home as a short sale, and the bank wants market value. Seems to be a conflict of interest in that area, plus, how does the buyer obtain an over-market loan when it won’t appraise? Fortunately, I have been successful at not having to deal with Auction.com in any of my hundreds of Sacramento short sales, knock on wood.
My favorite newly proposed real estate law is AB 2136, which would clarify that a real estate agent is not required to keep a record of Tweets and Texts pursuant to a real estate transaction because those forms of communication are not considered a document. This means when I’ve receive a text message during sex, I can safely answer it in the throes of passion and not worry if it’s later deleted. I like that.
See, all good things coming out of our California Assembly, designed to improve our lives. Now, if they could just pass the mortgage forgiveness extension, we’d be well on our way to recovery. As it stands now, all of those poor homeowners who have successfully completed a principal mortgage reduction through a loan modification are positioned to get hammered on taxes. We have an exemption for short sales, but not loan modifications. Oy.
Spotlight: Homes for Sale in 95624 in Elk Grove
This weekend I’m meeting with my electrician and his wife in Elk Grove to talk about selling their home in 95624. As a top Elk Grove agent, I sell many homes in Elk Grove and, over the years, that city has developed into one of my speciality markets. The ZIP code of 95624 is close to the ZIP 95829, but that area of 95829 is in Sacramento, not in Elk Grove, even though homes in 95829 might be located in the same Elk Grove school district. All of the homes located in 95624 are within the city limits of Elk Grove.
Speaking of which, the schools are a primary reason many people with families choose to live in Elk Grove. There are 15 public and private elementary schools, 5 middle schools and 5 high schools, according to Trulia. Time Magazine in 2006 named Elk Grove as the fastest growing city in the United States, just as the housing market was beginning to crash. Many homeowners lost tremendous amounts of equity from 2006 to 2012. But today, we are on the road to recovery. Many people who thought they didn’t have any equity are amazed to discover that they can now freely sell their home in Elk Grove.
Homes in the 95624 ZIP code of Elk Grove priced between $350,000 and $400,000 can be more difficult to sell if the bulk of the homes in a given neighborhood are priced near $350,000 and you have that odd $400,000 home. But it doesn’t mean it won’t sell or that you won’t get top dollar for it. It just might take a little bit longer. I sold several in the upper end of that price range recently — closed a home in East Park at $385,000 last week and a Meritage Home in Britschgi Ranch will close shortly. In February, for example, there were only 7 homes in that price range that closed escrow. We’ll see an uptick this month, I predict. At the moment, MLS reports we have 229 homes for sale in 95624, which have not yet sold nor closed escrow.
The competition grows a bit more intense in the $300,000 to $350,000 range. Last February out of 29 listings in that range only 11 sold. That equals about 1 out of 3 homes. The hottest price range, though, is the “under $300,000,” those homes priced between $200,000 and $300,000. The pending sales in that price range for February exceeded the number of homes for sale.
And this is exactly where my electrician’s home is located. We’ll probably need to spruce it up a little bit because most people don’t live in the manner in which they would present a home for sale to the public. We live like real people and not characters in a fairy tale, but it is the fairy tale I will sell. This is a one-story home in a neighborhood in which many investors have flipped homes, and it’s a popular place to live.
I talk to everybody about real estate because it’s my passion. Even when I’m having an extra electrical receptacle placed under my home office desk. Thinking about buying or selling a home in 95624? Call Elizabeth Weintraub at 916.233.6759.
Same Fannie Mae Short Sale Wrinkle But Different Approach
In short sale forums across the country, agents are lamenting the problems associated with Fannie Mae short sales and Freddie Mac on short sales, but I suspect that many short sale agents in Sacramento never even bother to look up Fannie Mae loans nor Freddie Mac loans prior to commencing the short sale — because some of them are way too focused on themselves and the fact they got a listing instead of putting the focus where it belongs: on the client, on the transaction itself.
It’s true that Fannie Mae and Freddie Mac cause havoc in a short sale. What else is new? But at least they are trying to do something about their muddled mess, even if it’s fairly ineffective, they get a B-plus for effort. One of the newer components of these types of short sales is our ability as a Sacramento short sale agent to request a pre-approved sales price.
The sales price, I should note, is the list price, which is not necessarily the BPO value. Of course, that’s been the problem all along, the BPO has very little to do with the price that Fannie Mae and Freddie Mac demand. This is like trying to pat your head with one hand while rubbing a circle on your stomach with the other. Then there’s the question of whether the offer price needs to meet the list price because we still don’t really know how much Fannie Mae or Freddie Mac will accept.
So, far, list prices are still above market value.
This is different than when Fannie Mae or Freddie Mac, after 8 or more weeks of processing the short sale, notifies us of its demand for a higher price. This is often a strategy that means: the government wants to send the home to foreclosure, but we don’t want to come right out in the open and admit it. This is the strategy that has agents across the county up in arms and frustrated with our government sponsored enterprises (GSE). I don’t really know why the GSE’s adopt this strategy, but in my world, I’d rather get this information on the front end than the back end, and so would my sellers.
That brings to question the status in MLS after an offer has been received. Because even in its new practice, Fannie Mae and Freddie Mac cannot seem to get us the pre-approved value prior to an offer. If we change the status in MLS to Pending Short Lender Approval, it means we don’t want any more offers. If the offer we have received is not close to or above the pre-approved price, we could be hosed if the buyer won’t raise the price upon demand, and we won’t get that demand from the GSE until we are closer to closing.
My solution for these dilemmas is to leave the file in Active Short Contingent status and allow backup offers.
Saying Goodbye to the Downtown Sacramento Mall
After shooting photos of a new listing yesterday afternoon, I stopped at the downtown Sacramento Mall to visit Macy’s to see if I could pick up a new pair of shoes, as I have not been shoe shopping in person at a department store for almost a year. I work too much. The problem with Macy’s, of course, is it has downgraded its inventory so it tends to carry a lot of cheap-ass crap nowadays because it thinks that’s what Sacramentans want to buy and who knows, maybe they do.
Much of the downtown Sacramento mall is deserted. It won’t be long before the men’s store and furniture division of Macy’s will move out, too. This is where the new stadium for the Kings will be built. I owed it to myself to give it one more quick walkthrough before everything changes.
Fortunately, I did find two pairs of shoes I liked, but they were very similar to each other. As I stood there admiring them on my feet and prancing about, I decided I did not have all day to ponder the pros and cons between the two pairs, and I could not easily make up my mind, so I just bought them both. That seemed like the most cost effective way to solve my dilemma. The salesman saw that I had been struggling in my predicament and undoubtedly noticed how I resolved the issue by grabbing both pairs. He suggested maybe I would like the same shoe in a different color. Well, maybe he should go into real estate and stop wasting his talents in the Macy’s shoe department?
Macy’s now has WiFi so my cellphone worked all over the store, which was great! I chatted with buyers looking for homes, an agent in Phoenix sending me a referral, and a possible new listing for a seller in East Sacramento. But I knew I had to get back to my home office and upload photos for my new listing before it went live in MLS at midnight. That was a pressing deadline. I had allocated an hour for shopping and my hour was over.
I dashed for the elevator. The door opened, I got on and reached into my pocket for my cellphone. Just then a heard a guy yell HOLD THE ELEVATOR as he sprinted across the parking lot, his face beet red from puffing and huffing. I pushed CLOSE. Rats. He stuck his magazine into the door and jammed it open. I am nice all day long, darn it.
Foiled. He got on anyway.
Karma gets you, you know. Sure enough, I zipped into the middle exit lane, the one without a dude in the box who can take your ticket, and I ended up having to back out while some woman in a sporty red car yelled at me because she thought I was going to hit her.
As I drove up 9th Street with the top down and hair flying, leaves whirling around me in gusts of wind, I thought about how different it is to be working from my home office today versus what it was like in the 1980s. Almost nobody back then worked from home, and if you did, you didn’t tell anybody about it. Nowadays, it’s very common place. Few top-producing real estate agents work out of an office. You meet clients at the office, but you work from your home office.
If you haven’t been to the downtown Sacramento mall yet to say goodbye to the old place, this might be a good time to do it. And tell that guy in the shoe department at Macy’s, the kid with the red hair, he should go into real estate.