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Why does RE agent say list house $30K less than Zillow estimate?

Posted by digginginthedirt (My Page) on
Mon, Mar 5, 12 at 21:02

My parents are in a quandary about how to sell their house so that they can move to a retirement community. First they were going to sell at an auction, which is very common in our area. But then they decided to list it. It just so happens that the auctioneer is also a real estate agent, so he is listing the house for them.

My parents custom built their home 35 years ago, and it has tons of amenities that most people do not put in their homes. It also has a second kitchen in the basement which my mother used to do her freezing and canning. The house is well maintained and tastefully decorated. The landscaping is impeccable. Ok, it doesn't have granite countertops and SS appliances, but neither do any other homes in their area.

When they were talking about an auction, I looked on Zillow and noticed that their house value is listed as $x. I actually thought their house could easily bring $x + $10,000-$20,000 at an auction, but you never know.

After they changed their mind and decided to list it, the auctioneer put on his real estate agent hat, and discussed price. His price is $x - $30,000. In my parents price range, that is a significant amount of money to leave on the table. As I look at listings on Zillow that are in their school district, all homes are priced higher than the Zillow estimate.

Why do you think the agent is listing their house so low?


Follow-Up Postings:

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RE: Why does RE agent say list house $30K less than Zillow estima

I am not sure how accurate Zillow is, but what do the other houses sell for in the area. Maybe they need a different agent. Auctions do sell low, at least in our area they do. Hope the RE people have better ideas and help.


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RE: Why does RE agent say list house $30K less than Zillow estima

The Zillow estimates are all over the place for properties in my neighborhood.

With regards to your parents' house, is everything 35 years old? I am asking because in my parents' also custom-built home, everything is 43 years old except some of the appliances, the air conditioning and some of the decor (which is 25+ years old). It has all been exceptionally well maintained, but it is still "old".

It doesn't matter to a lot of people what the quality is in a house of this age, because it is not an antique or historic house yet, it is just "old" and many people want "new". Plaster vs. drywall doesn't matter, good millwork vs. hollow doors doesn't matter...potential buyers may Notice it, but they don't necessarily want to Pay More for it.

My parents' carry full replacement on the dwelling and it is about 4-5 x what the market value is.


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RE: Why does RE agent say list house $30K less than Zillow estima

Zillow estimates aren't a substitute for true comps of similar houses based upon actual sales. For some houses, Zillow estimates may be accurate. But I've seen them be wildly inaccurate.

Your parents should ask to see the comps that the agent is basing the suggested price on. If they aren't under contract with that agent, they might talk to more than one agent.

That said -- as someone who recently sold a house and bought a house -- often people think that a feature is worth extra money when selling but it is only worth it to someone who wants that feature.

So, an extra kitchen is something that is probably not valuable to most people. If I was looking at the house I would not pay one penny more for a second kitchen since it has no value to me. Likewise, when I was selling my house we had a guest house. For many buyers that guest house was not needed and would have added no value to the house.

BTW, the fact the house is tastefully decorated is largely irrelevant since nice furniture doesn't transfer with the house.

Also, don't look at what other houses in the neighborhood are listed for -- look at what houses sold for. When we were looking there was a nice house that was listed for $310k. That price was in line with other listings in the subdivision. So, the sellers probably think it is reasonable. But....we looked at the comps for sold houses. The reality was that all the houses currently on the market in the subdivision are priced too high in relation to the comps for sold houses. The house is still on the market...


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RE: Why does RE agent say list house $30K less than Zillow estima

Although the house is 35 years old, almost everything in the house has been updated or replaced, except for the kitchen cabinets, which still look great. My mother has excellent taste, so no garish decor or wallpaper, etc. But it is by no means suited to the HGTV couple who has to have everything new and updated. However, in our area, the culture is different, and there would be a sizable pool of people who would value the house as it is. It is move in ready.

What I have observed in our area over the past few years is that homes are listed at above the zillow estimate, and most times sell above the estimate. I have never noticed a home being listed below the zillow estimate, let alone being listed at $30,000 less. I completely understand that zillow is not the authority, but I'm using it as a constant for which I'm noticing the trends I just mentioned. So I have to wonder why the RE agent is suggesting this price.

The auctioneer/RE agent mentioned that people check zillow before coming to an auction, so it would follow that they would be checking zillow before taking a tour of the home. Why then does he want to undercut the value of the house? And if it doesn't sell, but then goes to auction, the bidding will never go above the previously listed price. It will be very easy to check that. However, if it had not been listed but was put up for auction, people would be checking the zillow price and using that as a benchmark.


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RE: Why does RE agent say list house $30K less than Zillow estima

My experience, after paying attention to the listing and sale prices across two metro areas for over a year, is that ZIllow estimates are inaccurate far more often than they are accurate. I have seen a few times when a house sold for within a few dollars of the Zillow estimate, but it's infrequent enough that it could more easily be chalked up to luck than to accuracy.


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RE: Why does RE agent say list house $30K less than Zillow estima

Also, when I say the house is tastefully decorated, I'm fully aware that furniture doesn't sell the house. I apologize for being unclear, but what I meant was that the colors chosen for walls and floor where tasteful. Sorry for the confusion.


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RE: Why does RE agent say list house $30K less than Zillow estima

I'm with Northlut. Around here Zillow is just a joke. I would look at sold comps in your neighborhood and ignore Zillow completely. In this area it's still 2008 as far as they're is concerned. Ludicrously behind actual current values.


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RE: Why does RE agent say list house $30K less than Zillow estima

Zillow isn't any basis for any real estimate. The only thing that matters is what has SOLD. Your comps.

Post pictures of the home and it's interior if you want actual feedback on the staging and readiness to sell.


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RE: Why does RE agent say list house $30K less than Zillow estima

The Zillow estimate is not the value of the house. Comps are more likely to give you a better estimate of value. The question isn't why the agent suggested a price lower than Zillow. Frankly, if an agent suggested a price based upon Zillow I would question the competence of the agent. Presumably, the agent is basing the price estimate on recent comps for houses that sold. If that is not the case, then I would ask to see recent comps.


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RE: Why does RE agent say list house $30K less than Zillow estima

If the agent did not provide at least 3 SOLD comps within 3 miles of you, then get another agent's opinion. In fact, get rid of him and your use of Zillow. Here is an article that I wrote a while back.

Free CMA Request! Lake Norman and Greater Charlotte NC Area
What is a CMA � Comparative Market Analysis?
For most of real estate history, determining a home�s value has been left to appraisers and Realtors. The stakes are high for homeowners who need a solid valuation in order to make important decisions concerning refinancing, listing their home for sale, or for those who just need peace of mind by knowing what their largest monetary investment is currently valued.

As soon as you fill out our short Valuation Questionnaire Form, it will start the process where one of our licensed real estate Brokers will perform a free Comparative Market Analysis, customized for you; these Brokers perform home valuations as a part of their daily practice and all possess the knowledgeable combination of art and science that a true home valuation deserves.

The report will contain at least three recently sold comparable homes that will be listed in the report for your convenience and then emailed to you. Also, if you would like, the Broker we will create a custom Neighborhood Home Sales Alert, notifying you as soon as any of your neighbor�s homes gets listed for sale and when any of your neighbor�s homes goes under contract and then sold. All real time notifications. What a great way to stay informed as to how your local market is impacting you!

What about Zillow, Trulia and other Internet Valuation Systems?

These companies use computer algorithms to generate home valuations, and are more crude than most homes buyers and sellers realize and most often add confusion to the evaluation process.

Valuations that are 20, 30 and even 50 percent higher or lower than a property�s eventual sales price are not uncommon. According to the companies themselves, some valuations have changed dramatically within a short period of time � some as much as $100,000.. In fact, at least 25% of these Guesstimates wind up being at least 20% off of the properties actual sales price.(The Fuzzy Math of Home Values; Smart Money)

The problems are not few for these home valuation websites… Public records, which are scrubbed by these site�s computers, are notoriously inaccurate when it comes to reporting a home�s square footage, new additions, the number of beds and baths, and correct acreage. Even more of a problem is that real estate valuation is very local, and even similar sized homes in the same neighborhood can have unique characteristics. No super computer is going to take into consideration whether or not the subject home (or the comparable properties used for that matter) has a swimming pool, or is next to railroad tracks, or is in great or neglected condition, or needs updating, or is a waterfront home with a grand 4 mile view or if it is one that may be tucked back in a cove with little water depth..


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RE: Why does RE agent say list house $30K less than Zillow estima

Zillow estimates also swing wildly - jumping $20k up or down inside of 1 month. It's very weird. In my town, Zillow is often too low. A house just down the road from us sold for $360k at the end of the summer & Zillow lists the value as $315k. Now, that house closed less than 8 weeks after it hit the market, so the deal was probably made within the first month of the listing.

IOW - don't rely on Zillow, but DO use it to see what houses have sold recently in your area. The map feature is useful for that. Not much else.


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RE: Why does RE agent say list house $30K less than Zillow estima

Zillow is a joke. I have no clue why they are still in business and why so many people use them. When my house was for sale, Zillow said it was worth $189k, but my asking price (which was derived from comps) was $260k. I was really worried the Zillow price would screw me. I sold the house within 6 weeks and got S250k. I sold the house back in December. Zillow just sent me another update on my house value last week - they were proud to announce my house has increased in value - to $205k. Gee thanks for that info, Zillow - it really helped!

You need comps for similar houses that have actually sold within the past 3 months in your area. If your auctioneer/realtor is relying on Zillow, you need to find someone else.

Good luck!


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RE: Why does RE agent say list house $30K less than Zillow estima

cas66ragtop, that's precisely why I am concerned. Zillow is notorious for undervaluing homes, yet this agent is pricing my parents' home another $30K below Zillow's price. Every listed home in the area is listed at a price higher than Zillow's. Even when I look at recently sold homes in the area, the sold price is still higher than Zillow's. I'm not saying Zillow's price is correct, I'm just saying that when looking at the trends in my parents' area, I'm concerned when a realtor prices the home so low. I think he wants to sell it fast, make his commission, and run. Since my parents don't seem to know much about the value of their home, they are easy prey for this action. It makes me sick.


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RE: Why does RE agent say list house $30K less than Zillow estima

digginginthedirt -- you aren't getting it. Yes, Zillow can be low at valuing houses. Zillow can also be high. The point is that it doesn't really have anything to do with how the house should be priced.

People keep asking you if the agent has provided actual sold comps to justify the price. You keep not answering. But that it is what is relevant! If the agent is not providing real comps then I agree it is certainly worth talking to another agent. On the other hand if he has provided comps then he could be right.


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RE: Why does RE agent say list house $30K less than Zillow estima

>Zillow can also be high.

Yes, I would say in our area it averages about 30% over market. Nobody in their right mind pays any attention to what it says, at least not hereabouts.


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RE: Why does RE agent say list house $30K less than Zillow estima

Diggininthedirt, it isnt that zillow is notorious for underpricing homes. THey dont price homes, they simply take a BASIC look at homes in the area but they dont necessarily have to be similar. For example, you can have a 3 bedroom home worth 500k and a 3 bedroom home worth 180k. Zillow simply averages sales in the area and comes up with a number. There are no real comparisons there. Dont stress over it, simply have your parents get CMA's from three local realtors. You SHOULD be able to get a good idea of what the house is worth from that.


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RE: Why does RE agent say list house $30K less than Zillow estima

I have actually found Zillow to overvalue more than undervalue in my current area. I've seen some estimates that were more than 25% above what the house ended up selling for. And this is in the 7 figure price range, I'm not talking about a few thousand dollar difference. I think if the agent keeps talking about Zillow, he doesn't know what he's doing. I've never encountered a real estate agent who brings up Zillow at all, other than in response to someone else mentioning it, and even then only to say it's not very accurate.


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oops

Other people posted while I was typing my reply saying the same thing. Sorry.


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RE: Why does RE agent say list house $30K less than Zillow estima

Sorry, kats_meow, I wasn't picking up that others were asking me if comps where presented and that I needed to answer that. I was reading the comments as statements that there NEEDED to be comps. Let's just chalk that up to a senior moment on my end, okay?

He presented some comps, but I question his motive in the ones he chose. When I check on trulia, I see comps that tell a different story, but I'm not trained to interpret them. I don't trust this RE agent. I have worked with a few over the years, and I think I am a pretty good judge of character in general. He seems to have his own agenda. I know that one can find data to support whatever argument they want to make. So I could find all kinds of data to support a higher price, and he will counter with data to support a lower price.

But there are homes that have sold near my parents' house that are similar in size and style. They sold for $30K-$50K more than the price I think my parents should list at. And that price is still $60K-$80 above the agent's recommended selling price. I don't know what the agent is using as comps, but I think he is picking homes to make his case to put a low number on the house to make a quick sale off of unsuspecting old people.

I don't think my parents will contact more RE agents at this point. I think they will list it at the low price. There's nothing I can do. Thanks for all your input.


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RE: Why does RE agent say list house $30K less than Zillow estima

Maybe this auctioneer/Realtor is using a pricing strategy from his auctioneering experience, and is pricing low in an attempt to get a bidding war going. In any case, I would strongly urge your parents to get one or two more opinions.


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RE: Why does RE agent say list house $30K less than Zillow estima

Maybe you could get them to get an independent appraisal?

This may be too personal, but is their retirement community one that uses the assets of the resident? We have some stepped care senior facilities around that just use your assets until they are gone, and then you can stay for the duration. (this is a simplistic description, I know). So what I am getting at is, will the $30K make that much difference in their move and their care.

My father would not turn over his house (although he made his parents do so, so they wouldn't lose it) and when he goes into assisted living, they will certainly take the house and sell it. The house is very undervalued due to its location, but I don't really what they get for it if it makes no difference to his care.

This may not be your parents' situation at all however.


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RE: Why does RE agent say list house $30K less than Zillow estima

Palimpest, good question. I need to find out the answer to that. Thanks for bringing it up.


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RE: Why does RE agent say list house $30K less than Zillow estima

What is so hard about getting two more valuations?


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RE: Why does RE agent say list house $30K less than Zillow estima

For some people, getting more advice, valuations, appraisals, etc is unthinkable, the poster here the adult child of the house owners, she is asking our opinions and advice, but she cannot make her parents do anything.
For people who do not have parents like this it may be impossible to understand why they won't listen (and appreciate) good, prudent, advice regarding lots of money they may lose, but it is how it is for those watching others make mistakes.


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RE: Why does RE agent say list house $30K less than Zillow estima

Oh, my, we just had a family meeting tonight, and apparently there were NOT comps presented by the RE agent. Instead, what he did was ask my dad what he wanted for the property, and then added another $7,000 to that. We showed my dad comps and he is very resistant to setting a price comparable to other homes that have sold in the area. However, when asked, he says he would be happy with the price he named, so...there is nothing else to be done. I am moving on. I can't waste anymore energy on this.

I have learned a lot from all of your comments, and appreciate the time you took to give me advice.


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RE: Why does RE agent say list house $30K less than Zillow estima

Maybe they are tired and just want it over and done with. If they paid off the mortgage long ago, they set the price where they were comfortable, and know it will sell quickly, rather than someone younger who has to reinvest.


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RE: Why does RE agent say list house $30K less than Zillow estima

The selling price is not what I would be worrying about at this stage... it is having an agent that is lazy. If he could not find the time to research the home for pricing and maximizing his clients profits, then we all probably know how much time and effort he is going to put into representing your parents interests.
But, like has been said; you have done all you can do. You have already put in more work than this agent. Good for you.


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RE: Why does RE agent say list house $30K less than Zillow estima

ncrealestateguy, yes, he is lazy. My sister told my parents to fire the guy, buy it fell on deaf ears. I am appalled at how the events are unfolding, but there's nothing more I can do.


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RE: Why does RE agent say list house $30K less than Zillow estima

Have you considered whether your parents may need financial conservatorship? Sometimes what looks like simple, ornery, stubbornness in older people is actually a defensive disguise for confusion stemming from cognitive decline (or at least fear of that).

You said your father had made up his mind, but you referred to your parents in the plural. What does your mother think? Sometimes older people have long-established, pretty strong, gender-based roles within a marriage, so it may not be something she will discuss. It might be worth a shot, though, if you and your sister feel strongly enough about it. Since the money would be going for their care you aren't out of line in persuing it.

Sorry you are having stress about it. Try to keep on the same page as your sister and other sibs, though. It will give you all strength as things go forward.

Don't confuse the issue (and your parents) with internet-based values. Just keep it simple: when you are ready to sell you get a property appraised (by a fee-based appraiser, if necessary). Many people use three realtors' CMAs, but your parents' attorney can recommend an appraiser to help them come to grips with pricing.

L.


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RE: Why does RE agent say list house $30K less than Zillow estima

I have found the best use of Zillow is to click on the recent sales tab. After looking at those prices it is often amusing to select the homes for sale in the area and compare the prices.


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RE: Why does RE agent say list house $30K less than Zillow estima

Zillow is going by addresses, not neighborhoods.

I live in a small enclave among lower priced samller houses.

Zillow does not take this into account, and consistently undervalues houses in my immediate area.

You want a market analysis of recent CLOSED sales to compare with.


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RE: Why does RE agent say list house $30K less than Zillow estima

Question for sellers & buyers - what happens if you go buy a house @ $X but your appraisals comes back less than that.

In other words, those same 3+ comps that is suggested for people use as a basis for making selling decision is based on some1's opinions - just like an appraiser who has his own opinions when he's working for the lender.

& I wonder what to believe in this era of stricter lending policy esp. when you hear about wildly varied opinions on both sides.


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RE: Why does RE agent say list house $30K less than Zillow estima

Question for sellers & buyers - what happens if you go buy a house @ $X but your appraisals comes back less than that.

The bank will only lend based on a % of the appraised value, so if this happens then either the seller agrees to a price reduction to the appraisal amount, or the buyer brings more cash to closing to make a larger down payment. Or some mix of the two.


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RE: Why does RE agent say list house $30K less than Zillow estima

"Question for sellers & buyers - what happens if you go buy a house @ $X but your appraisals comes back less than that. "

If you have a clause that requires the house to appraise for the selling prince (or more) the contract is voided.

If you do not have this clause you likely need to put more money down to make up what the bank will loan since that is based on the appraisal.

You need to understand that you just payed more than the valuation.
This might be acceptable, the valuation could be low, or you could simply view the place as more valuable for your own reasons.

I purchased a property for more than its value since it had once been in my larger family, but a relative sold it off.

It had enough memories to be worth the extra money to me, but obviously not to an actual 'arms length' buyer.


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RE: Why does RE agent say list house $30K less than Zillow estima

We just had an appraisal for a refinance. The way-out-of-town appraiser really undervalued the property. Since they changed the process for assigning appraiser to the banks, you can end up getting an appraiser that doesn't know your town. Some of the comparables were a joke. It doesn't matter much to us as we have about 50% equity, but they just went from one bad appraisal system to another.


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RE: Why does RE agent say list house $30K less than Zillow estima

Sorry to say sometimes when a person (elderly) has made up his/her mind it may be for a couple of reasons: 1st, they like the agent, 2nd they are afraid that if they make a decision/ask the children's opinion/help that the kids will take the matter out of the parent's hands, 3rd: Dad is in control--I will not let my kids tell me what to do!!! 4th: they are tired/sick/ and just don't care, want to sell and move and still be in control. I went thru this with my folks, but by the time I had to take control, my Dad was blind, by brother had moved in, and my Mom was bed ridden. They are both gone, but it was very, very difficult. Thank goodness, I had control before it got bad. I do wish you the best.


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RE: Why does RE agent say list house $30K less than Zillow estima

I just took a look at that website. It said our home was worth about $179,000--we just sold it (haven't even gone to settlement yet) for just under $200,000. Another house, a block from me was zillowed at $190,000--they sold about 6 months back for $140,000--and had a hard time getting that. The prices for other houses in my neighborhood were similarly all over the place--some were at least $50,000 too low, others were way high.

Your agent should be providing a whole stack of comparables. We've had 2 agents in the past year, each supplied us with about a dozen recently sold properties that were similar to ours, so we could evaluate the current local market.

Personally? I'm not sure I'd go with an auctioneer/agent. Seems a little iffy to me. I'd further recommend that they use an agent affiliated with one of the large chains, the kind that specialize in both local sales and relocation sales.

For our first agent, we went with an older, established 'little' firm--thinking age and experience were the way to go. Didn't do us much good. This time around? We went with young and hungry (our agent is about 30, and a real go-getter) who's with one of the huge chains that does a lot of relocation sales. And we sold in 6 weeks, in THIS economy! For a lot more than we expected to get for our house.

Can you suggest to your parents that they talk to at least 3 or 4 different agents, from different agencies, so they can make a more informed choice on who will best represent them? I have a feeling, that if they talk to almost anyone else, this guy will be out the door.


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RE: Why does RE agent say list house $30K less than Zillow estima

"we just sold it (haven't even gone to settlement yet)"

Only closed sales count.


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RE: Why does RE agent say list house $30K less than Zillow estima

Well, yes, brickeyee--if you want to get technical, you're right, of course. BUT we have the contract to sell, the house has passed all it's inspections, it's been appraised at MORE than the buyers are paying (slightly, but since we're commenting on the zillow appraisals....) and the buyers have their financing. The only reason it' isn't a done deal is that the buyers were willing to postpone settlement a couple of weeks for us, since we'll then be 62 and can take advantage of the senior transfer discount.

I don't think, honestly, for the sake of this discussion, that all matters, though. My point was that we quickly (in under 6 weeks) were able to find buyers who are willing to pay considerably above the zillow estimate for our house. The only point I was trying to make was that Zillow is not an effective tool for estimating the potential current asking or selling price.


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RE: Why does RE agent say list house $30K less than Zillow estima

"The only point I was trying to make was that Zillow is not an effective tool for estimating the potential current asking or selling price. "

That is so correct it is not even funny.

The biggest defect it has is simply using distance from one address to determine value.

It will fail for any house not surrounded by very similar houses.

An infill of about a dozen $850,000 houses adjacent to a 1950 development of $500,000 houses shows up rather badly.


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RE: Why does RE agent say list house $30K less than Zillow estima

I wish my tax appraiser used zillow.


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RE: Why does RE agent say list house $30K less than Zillow estima

I wish my tax appraiser used zillow.


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RE: Why does RE agent say list house $30K less than Zillow estima

"I wish my tax appraiser used zillow."

They are not that dumb.


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