Home Buying in Danville>Question Details

Jrgolfer123, Home Buyer in Danville, CA

Never pay above Eappraisal / Zestimates?

Asked by Jrgolfer123, Danville, CA Sun Jul 28, 2013

We're looking for an investment rental property & wonder how far off are zestimates & eappraisal valuations? One property in Bay Point 436 Levee asks $195k but zestimate is only $140k? Another on in Antioch asks 249k but eappraisal is only $117k & zestimate $195k.

Are these properties overvalued? Would they make good profitable rentals?

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BEST ANSWER
Don't rely on websites for your CMA --- comparable market analysis ---- ask a realtor to help you. Perhaps this article can help explain some of the pitfalls of real estate websites
http://www.bottomlinepublications.com/content/article/wealth…

Just remember that a CMA is not the same thing as an appraisal. When a realtor prepares a CMA, he is looking at market value for listing price purposes. Whereas an appraisal looks for how much a lender should loan on the property based on a sales approach or cost approach. Here's a good explanation http://homeguides.sfgate.com/should-real-estate-appraisal-ma…

As for eappraisals vs Zestimates --- they can be worlds apart as you have seen. Best that you engage a realtor to help

Good luck
3 votes Thank Flag Link Sun Jul 28, 2013
You are quite welcome. Let me know how I may help. Take care.
Flag Sun Jul 28, 2013
Thank you for clarifying the difference btwn CMA & appraisal.
Flag Sun Jul 28, 2013
Hi Jrgolfer123,

Take a look at http://docs.Steven-Anthony.com/ZestimateAccuracy.pdf

Accuracy does not seem to be improving....

-Steve
1 vote Thank Flag Link Mon Jul 29, 2013
Hi Jrgolfert
I would NEVER EVER go by a zestimate or eappraisal. Zestimates are known to be wrong--
Just pay for a fee appraiser when you go into contract and make it a contingency.
0 votes Thank Flag Link Tue Apr 22, 2014
I wouldn't rely on either Zillow or Eappraisal but If I had to go with one it would be Eappraisal. I am a experienced investor for over 14 years . I have a Real Estate lic, a appraisal certificate, and have taught real estate investment classes. the best thing to do if your serious about a house is get a professional to do a BPO. try contacting AVM I recommend there services.
0 votes Thank Flag Link Tue Apr 22, 2014
Find a local Realtor to run a CMA for you. Do NOT trust zestimates. I zestimate that they are WAY off.
0 votes Thank Flag Link Mon Nov 11, 2013
Ask your Realtor for a CMA
0 votes Thank Flag Link Mon Nov 11, 2013
I would not count on Zestimates as most of the times they are not accurate. Your best bet is to contact a Realtor and they should be able to give you estimates for free.
0 votes Thank Flag Link Mon Nov 11, 2013
Never, never, never rely on a zestimate--they are a joke and have no value in real estate.
Spend the money on a fee appraisal to get the correct value from an experienced appraiser who actually walks into the house.
0 votes Thank Flag Link Fri Oct 18, 2013
Every real estate agent including the "buyer's agent" has a vested interest in getting the seller to pay as much as possible. So in order to avoid this built-in "feature", I've started dealing with the listing agent directly as that way, there is no allusion in my mind that anyone besides myself is looking out for my best interest. Every single solitary thing gets verified by county records, zoning office, permit office, etc, or as far I'm concerned, they're making it up. And even then you have to double check. After actually measuring several yards and home exteriors, I've found the square footage is frequently exaggerated. And I make my own appraisal prior to getting anybody else involved, and plan on going over the appraiser's choice of comps with a fine tooth comb as I was burnt BADLY in a prior attempt to purchase a home. You simply never know when the appraiser is getting kickbacks in exchange for inflating the value, even when you're paying their bill. Since there's only a few appraisers in any given area, they are all on friendly terms with all the realtors.

If you've been studying the market, you'd notice that the "sold" price is usually at least 20% less than listing price or estimate, whichever is lower. I've been studying the market for months and so far have only seen two listings which appeared to be priced at "real market value". Please remember we've had a housing bubble (as if anyone could forget) and there's still a very large amount of homes which haven't yet had a fair market price adjustment. Most owners are underwater if they've bought within the last ten years. So notice when the property was sold to it's current owner, and in addition, notice how much it sold for prior to THAT sale. Getting buyers to focus only on recent sales, is a scam tactic which fueled the flip frenzy. Why does it matter that you paid as much as your neighbor if you both grossly overpaid?

The system is set up to make it easy for the buyer to pay more than the property is worth. If you are asking these kinds of questions, then you are simply not prepared yet to enter the shark's pool. No offense but you have not studied the market enough to be able to answer these kinds of questions by yourself, and relying on a realtor who has a vested interested in a larger commission, is a mistake waiting to happen. I cannot stress this enough -- their entire purpose for breathing is to get you as the buyer to pay as much as possible, and make you feel good about getting screwed. Of course they are going to claim that ethical realtors exist, they certainly don't want you verifying anything they tell you. People who trust realtors are the worst sort of naive, especially if you foolishly believe they are your "friend". They would screw their own mother for a half percentage point.
0 votes Thank Flag Link Fri Oct 18, 2013
Golfer,
Correctly stated your question should read, "If you never want to buy a home, never offer more than the Zestimate/Eappraisal."
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I consistantly compare these values with the real values. Zillow own words (small print) stated in the new transparence format- 'accruacy can be no more than 10% and can be off an infinate amount.'
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A recent study in Indian Bluffs showed these online values to be incorrect by a crimianal amount A real example: a $502,000 home (that is what the home sold for) Guessed at $200,000! (the value when home was listed and the day it sold)
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If that is the accuracy or reliablity of the numbers from which you wish to make a decison...there are a plethora of random number generators from with to choose. I recommend creating your own.
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((Eappraisal + Zestimate + Tax assesed value)/3) * avr ratio = YOUR OWN CUSTOM SWAG!
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Or you may want to benefit from a consultant who assists in the selling and buying of real estate dozens of times a year. Most of these consultants have experience working with INVESTORS!
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Be aware, the financing bank has their own FIAT evaluation you must deal with.
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What makes my blood boil is the systemic deception these sites, who publish these numbers, practice that has you asking, "ARe these properties overvalued?" YOu should be asking, "Why haven't these folks been put in jail for their practice of public deception?"
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As Mack stated, these sites are good for entertainment, but when it's your money on the table, you just may want something more reliable than entertainment value.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us.
0 votes Thank Flag Link Tue Jul 30, 2013
You cannot base anything off of zestimates, as they are not accurate.
0 votes Thank Flag Link Tue Jul 30, 2013
Sorry to say you will pull your hair out and grit your teeth in total frustration if you rely on any RE websites like Zillow or Eappraisal to give you accurate and up-to-date information on property values. They are historically renowned for their inaccuracies. As other have stated you really need to call upon an experienced RE professional to provide you with a local CMA to get real time information and accuracy on values.
0 votes Thank Flag Link Mon Jul 29, 2013
Zestimates and the like are based on statistically comparable physical factors within a certain distance from the subject property. They do not factor in neighborhood boundaries, distress properties vs regular sales, owner occupancy ratios, schools, crime ... conditions that are definitely considered by those making offers in this hot market.

The biggest factor appears to be neighborhoods since these programs use radius searches. They can be reasonably accurate in areas with very large homogeneous communities, but most of our communities don't fit that parameter ... so high end neighborhoods that adjoin less expensive ones will be negatively impacted as will any infill home or small subdivision ... or as often happens in communities like Danville, Lafayette and Orinda homeowners go in and build significant additions and remodels... Zillow can't factor those circumstances in very effectively. As a reverse example I own a rental property in Antioch in a very distressed neighborhood. Zillow just sent me an updated Zestimate on the unit for $89,000... but the highest sale in the complex is $65,000. the key is that their price is based on surrounding neighborhoods with fewer challenges.

Additionally, because all the info Zestimates use is historical, in a rapidly changing market with few sales due to low inventory a differential of 20 to 30% is quite possible.

To evaluate whether these properties would make "profitable" rentals you will need the expertise of a Realtor to factor in cash flow, appreciation, maintenance, etc ... none of the websites can do that very accurately

good luck
0 votes Thank Flag Link Mon Jul 29, 2013
Zestimates have been wrong from the beginning--they are typically completely incorrect.
You need to have the realtor you are working with do a market analysis to determine a correct price
0 votes Thank Flag Link Mon Jul 29, 2013
Aw, gee, golfer. You really need to go out and look at a bunch of properties and learn how to evaluate them for yourself. All of the automated systems are fine for stay-at-home entertainment, but the money is made out on the street.

All the best,
0 votes Thank Flag Link Sun Jul 28, 2013
One way to compare if the homes valuation is similar to a Zestimate or Eappraisal would be to have an Realtor put together a comparable market analysis of similar homes in that neighborhood. There will be other variables to consider such as property condition, but with this information you will have a better idea if the home is priced correctly or not. With home prices having changed in many areas over the past year, it is very important that the comparable's you are basing your information off are recent.

Also, when determining if the home is a good rental, make sure that you can see what average rents are going for in the area. if you have any further questions regarding determining a value of a certain home or estimated rents, I would be glad to help.
0 votes Thank Flag Link Sun Jul 28, 2013
My pleasure. Good luck on your search!
Flag Mon Jul 29, 2013
Thanks for your info. The zestimates & eappraisals are tricky b/c for some properties for sale they're spot on. For others way off.
Flag Sun Jul 28, 2013
They vary a lot in different areas, you have to check with a local real estate appraiser in order to determine the accurate value of your property.j
0 votes Thank Flag Link Sun Jul 28, 2013
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