Monday, July 21, 2014

Dog Poo and Zillow

What does Dog Poo have to do with Zillow?

It has everything to do with Zillow and Zillow's insistence that it can give the consumer a 'value' for their home by the click of an address. Click, and you will see 'values' around your home, and thus you will know the value of yours. All things being equal, right?

Dog Poo.

Automated market values - we as brokers are all using them, analyzing them and sharing with the public. Zillow prides themselves on "Zestimates" - don't call a real estate professional, just ask Zillow!

Let me share a story with you about how much price per square foot matters when determining the value of a home. I use the word value because 'value' is not only what a buyer finds to be the value to them, but the value that a seller puts into their home in terms of quality, care and love. How much does value mean to a home?

While coming back from my Sunday walk today I passed by a home in my own neighborhood that was for sale. It was the same floor plan that I was living in and had not had the chance to preview the home when it came on the market - so I thought it would be a nice way to see this property.

As I passed through the front gate of the courtyard, I could not miss the putrid smell of rotting garbage and dog poo sitting at the front gate. Yes, you read correctly, a bag of smelly garbage and dog poo was at the front gate. I noted the weeds growing through the cracks of the unkept patio tiles. The courtyard was void of a water feature, which was a popular upgrade to this floor plan; instead it had just a sitting area, no flowers, no garden. The paint on the stylish vigas and posts was not the original custom color, but one that the owner probably got on sale at the hardware store. The finishes were all off. The 3rd car garage had been 'converted' to an extension of the casita, thus adding square footage, but adding value? Not at all. In fact, this extension of square footage just took away the value of a 3rd car garage and served to make the casita into an oversized, useless room.

The open house host met me at the door and I introduced myself as a broker and a resident. As I walked through the home I saw the builder 'basic' package of features - no upgrades in countertops, cabinets, appliances, or flooring. While we are on the subject of flooring, the carpets were old, faded and dirty. The window treatments were also filthy and bleached by the sun. One bedroom was painted an unflattering color and that paint was faded and spotty. The bathrooms were also void of any upgrades. The appliances were 'builder basic', as was the fireplace. Instead of a high polished plaster kiva fireplace, the option had not been upgraded and simply had a basic gas fireplace with no character.

This floor plan, when originally constructed, was one of the best floorplans that the builder offered. The builder offered many attractive upgrades which made this home style a real show stopper, but this property lacked any of that. Sure, it had location. Sure, it had the floor plan and square footage. This home lacked anything that would have given the 'value' that a price per square foot evaluation on-line would have produced. I asked the showing host how much it was being offered for, and it was presented at the "automated valuation if you didn't actually see it" price. It's actually going to be sold for quite a bit less than that, probably $100,000 less than this price.

There was nothing in this home that could or should be compared to the surrounding homes that have been upgraded and lovingly cared for. While that in itself is enough for a contradiction between an automated value and real market value, the Dog Poo is something that would be the biggest factor in a prospective buyer walking through that door and even wanting to consider this their next home AT THAT PRICE. This home, in it's present condition, would be considered a 'fixer' by any trained buyer (and buyers, by the way, are trained!)

So, the next time you consider using "Zillow" or seeing 'comps' in a neighborhood to be an evaluation of market value, remember the Dog Poo.

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