Well...this sorta hurts the neighborhood

[aprilchem]

You can definitely get comps excluded. A few years ago we were refinancing our house and it didn't appraise - when we looked at the appraisal we found that one of the comps they included was a home that sole for $100k less than market value. It turned out it was a family-to-family sale, so we asked for it to be excluded.

 

[mistysue]

If I'm reading correctly, selling for $350,000 instead of $425,000 isn't so bad. 18% low.
My neighbors decided to foreclose and their house sold for $68,000. I had just bought mine for $165,000. Their square footage was slightly higher than mine. Now that will effect your comps!
The real kicker was they had spent years saving money in a trust. They bought the house with the trust. When they were ready to move they sold it to themselves for a higher price, lived there for years without making a payment, then just before they got kicked out they bought a new house with the trust. They hit a bit of a goldmine because they started this just before the housing crash... they sold to themselves at the height of the market and got to buy triple the house for the same price! Every so many years when they can personally buy a house again they take their money, live free for a couple years and run with the profit. They helped ruin our local market, kill my home's value and I had to watch them make out like bandits.

 

[Bree]

Oh, that seems odd. But I live in Florida where these "comp" ya'll are speaking of do not really matter.

I live in FL and comps were most definitely pulled when we purchased our home here. We are in the process of purchasing another home and have pulled the comps on every property we saw.

 

[tvguy]

I live in FL and comps were most definitely pulled when we purchased our home here. We are in the process of purchasing another home and have pulled the comps on every property we saw.

Comps can have such a wide spread for identical houses. Comps for our neighbors house went from $310,000 to $450,000. They listed at $430,000 and 6 months later sold for $364,000.

 

[Hikergirl]

The house next door to me was listed pretty low (can't remember exactly how much) because it was an older couple and the husband died. The wife wanted out of the big lonely house fast so she could move into a retirement community.
The young couple that bought it got a fantastic deal, but did have to update the interior.
There have been 3 houses in my subdivision listed since, that low price did not effect their asking and selling price at all.

 

[Bree]

Comps can have such a wide spread for identical houses. Comps for our neighbors house went from $310,000 to $450,000. They listed at $430,000 and 6 months later sold for $364,000.

When he pulls the comps he starts with recent sales within a 1 mile radius then 2 then 3, etc. We throw out houses that don't "match" like sq footage, bedrooms, pool, number of garage bays, etc. We typically find that the price per square foot that those houses sold at were all within the same range. Now, neighborhood comes into play as well. Some are higher in demand which will drive the price up.

 

[WDBRDWLK]

We look at zillow just for fun.. I know that in my area, it is not accurate and one of those reasons is that it pulls data from our county tax listing and if the info is incorrect there, then it is a domino effect. Our house is incorrectly listed with 2 baths when in fact it is 2.5 baths and the floor plan is wrong too. The floor plan is actually our neighbors. Three years ago we did a complete remodel, spending about 75k and none of those upgrades are taken into consideration on the county tax site, which is fine with me, less taxes paid, but if we were to sell now, we would not be using the zillow estimate. Last fall, a home in our neighborhood, about 6 doors down, sold for 35k more than they were asking, and from what I heard, there were a few people interested in it and it went back and forth. So either the realtor had it priced too low or the family that ended up buying it had deep pockets!

 

[Mackenzie Click-Mickelson]

We look at zillow just for fun.. I know that in my area, it is not accurate and one of those reasons is that it pulls data from our county tax listing and if the info is incorrect there, then it is a domino effect. Our house is incorrectly listed with 2 baths when in fact it is 2.5 baths and the floor plan is wrong too. The floor plan is actually our neighbors. Three years ago we did a complete remodel, spending about 75k and none of those upgrades are taken into consideration on the county tax site, which is fine with me, less taxes paid, but if we were to sell now, we would not be using the zillow estimate. Last fall, a home in our neighborhood, about 6 doors down, sold for 35k more than they were asking, and from what I heard, there were a few people interested in it and it went back and forth. So either the realtor had it priced too low or the family that ended up buying it had deep pockets!

That's interesting about your upgrades not being taken into consideration. Does your permitting department communicate with your appraiser department? I'm assuming though for a complete remodel you had to have permits. Does the county's website have the wrong floor plan/wrong information or was it just Zillow?

 

[kymom99]

When he pulls the comps he starts with recent sales within a 1 mile radius then 2 then 3, etc. We throw out houses that don't "match" like sq footage, bedrooms, pool, number of garage bays, etc. We typically find that the price per square foot that those houses sold at were all within the same range. Now, neighborhood comes into play as well. Some are higher in demand which will drive the price up.

This is how it was explained to us too. My parents had an old house with a high end subdivision built all around it. In fact the land for the subdivision belonged to my family. My parents wanted to stay. When dad died mom wanted to sell. Because they sat on a double lot in this desirable neighborhood we figured it would be worth more. Well it appraised way lower than we expected. That's because the houses around it aren't comps. They are larger and newer. The appraiser had to go out 5 miles to find similar houses that recently sold. Long story short I bought the house from my mom for a nice price that in no way affects my neighbors. People literally knock on the door asking to buy the extra lot.

 

[FINFAN]

If I'm reading correctly, selling for $350,000 instead of $425,000 isn't so bad. 18% low.
My neighbors decided to foreclose and their house sold for $68,000. I had just bought mine for $165,000. Their square footage was slightly higher than mine. Now that will effect your comps!
The real kicker was they had spent years saving money in a trust. They bought the house with the trust. When they were ready to move they sold it to themselves for a higher price, lived there for years without making a payment, then just before they got kicked out they bought a new house with the trust. They hit a bit of a goldmine because they started this just before the housing crash... they sold to themselves at the height of the market and got to buy triple the house for the same price! Every so many years when they can personally buy a house again they take their money, live free for a couple years and run with the profit. They helped ruin our local market, kill my home's value and I had to watch them make out like bandits.

is this even legal?

 

[tvguy]

When he pulls the comps he starts with recent sales within a 1 mile radius then 2 then 3, etc. We throw out houses that don't "match" like sq footage, bedrooms, pool, number of garage bays, etc. We typically find that the price per square foot that those houses sold at were all within the same range. Now, neighborhood comes into play as well. Some are higher in demand which will drive the price up.

These were tract homes on the SAME street, in almost the same condition.
Comps on my mom's house were nothing more than a guess. All custom homes, some built in 1935, others in 1960, 1970, or just completed. 1500 square feet to 13,000 square feet. 1/2 acre or 2 acre lot. On the main road, or a mile off.
it.

 

[Srbright]

Three words...."gift of equity".

We have friends getting ready to purchase their first home and his dad owns the house. They are getting about a 30-40% gift of equity from the dad (house is $200k, he is selling it to them for $140k). That's why you can ignore one comp. The neighborhood doesn't have a say in how much he sells the house for.

Stacy

 

[Srbright]

is this even legal?

Legal and ethical are two different things.

It is technically legal. Someone would have to prove fraud and be able to prove they own the trust (which is harder than it sounds). The bank wouldn't know they own the trust and does a regular foreclosure.

Stacy

 

[kymom99]

Three words...."gift of equity".

We have friends getting ready to purchase their first home and his dad owns the house. They are getting about a 30-40% gift of equity from the dad (house is $200k, he is selling it to them for $140k). That's why you can ignore one comp. The neighborhood doesn't have a say in how much he sells the house for.

Stacy

The gift of equity still counts towards the sale price. That's how I bought my house from my moms estate. I got 25k gift of equity. In your friends case if they are buying for 140k they still need 20% of that down to avoid pmi. So they would be reporting the sale as the full amount with the gift and financing 140k.

 

[Srbright]

The gift of equity still counts towards the sale price. That's how I bought my house from my moms estate. I got 25k gift of equity

Only if you need it for a down payment. The guy is listing the house at $140k and only selling it to the son.

Stacy

 

[FINFAN]

Legal and ethical are two different things.

It is technically legal. Someone would have to prove fraud and be able to prove they own the trust (which is harder than it sounds). The bank wouldn't know they own the trust and does a regular foreclosure.

Stacy

Wow....thanks for the explanation.

 

[jgates]

Zillow is so bogus on my property. Has nothing listed in the square footage, nothing listed for number of bedrooms, baths etc. Nothing listed for 2 garages or separate garage sized storage building. Listing is probably around $40,000 less than what we could get for it. And even more amusing is the rent we are supposed to be able to get for it. $1200 per month? Not likely in this rural area. Nothing around here rents for that, whether it's in the city or the country.

 

[Darcy03231]

Zillow is a bad source all together. My home was listed wrong on zillow for years. Finally, I just edited my own home details. It showed my home as a one story with less bedrooms, bathrooms, and square footage than it actually had. It is simple to claim the home as yours on zillow and edit the details just as easy as you can edit wiki pages. For this reason, I would call zillow as an unreliable source since the public can edit.

At work, I have to look up home information about a dozen times. I use http://publicrecords.netronline.com/ to look at county websites. We are not allowed to use Zillow at work. LOL.

I agree. Zillow has the "zestimate" of the value of my home at about $100,000 less than what it's worth. For some reason it compares it to the rest of the town and fails to take into consideration that we're lakefront. A house diagonally across the street from me which is smaller and not updated and only has lake access just sold for significantly more than what my "zestimate" is.

 

[Westcoastwild]

I'll echo what the others have said: ya just never know what's going on.

Take my parents house and their neighbors house. My parents house has had way more upgrades. The neighbors are penny pincher said and the not the upgrading type. But upgrades they did were the important ones. Like the basketball patio and the emergency exits for the basement rooms. My parents can't count the basement as livable space and they have a dog run because they have dogs, not teens. And my parents also have a retaining wall instead of trees at their back fence.

Who knows which house would sell for more. Buyers are weird. But my bet would be on the neighbors. If you move into that neighborhood, it's probably for the school district, so you want more bedrooms. And you probably want a good yard for entertaining- not a dog run. My mother has beautiful kitchen cabinets but you can change kitchen cabinets. It's a whole lot more expensive to add bedrooms or bath rooms!

 

[tvguy]

I agree. Zillow has the "zestimate" of the value of my home at about $100,000 less than what it's worth. For some reason it compares it to the rest of the town and fails to take into consideration that we're lakefront. A house diagonally across the street from me which is smaller and not updated and only has lake access just sold for significantly more than what my "zestimate" is.

Zillow is just an estimate. But so are comps. The comps on my mom's house ran from $495,000 to $695,000, from 6 "professional" Realtors. Zillow was a lot closer to what the house actual sold for than 3 of those Realtors.