Archive for April, 2007
Zillow.com Told to Stop Issuing Home Value Estimates in Arizona
April 18th, 2007 categories: Central Connecticut News & Information, Home Buyers
The state of Arizona recently told Zillow.com to stop providing Zestimates, their version of property value estimates. The issue is that Arizona feels Zillow is providing appraisals and they do not have a license to do so. Zillow argues that their Zestimates are not appraisals and the public does not think Zillow.com is providing free appraisals.
You decide.
Are Zillow.com Zestimates appraisals?
The definition of an appraisal:
“An estimate of quantity, quality or value; the process of through which conclusions of property value are obtained; also refers to the report setting forth the process of estimating value.” From my “Fundamentals of Real Estate Appraisal” textbook.
From Zillow.com, their definition of a Zestimate:
The Zestimate™ (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula.
Although Zillow.com says Zestimates are not an appraisal, don’t these two definitions sound sort of similar?? Both use the words “estimate” and “value.”
Does the general public know the difference between an appraisal and a Zestimate?
There is a good discussion of this issue on BiggerPockets. You’ll see my response to the issue of the general public being aware of the difference but here it is anyway:
While real estate professionals understand that a Zestimate is not an appraisal, consumers do not. Not only have clients of mine referred to Zillow to make buying decisions but I just read with horror this past week in my local paper that a taxpayer was suggesting that towns cease hiring appraisers to do property valuations.
Furthermore, the writer suggested residents use Zillow’s Zestimates to fight their town’s property valuations. Obviously, she had not read the site to find that Zillow gets its information from the town and my paper is so clueless that they published it.
My point is that people are not reading the disclaimers, they do not understand how the figures are calculated and they are making important decisions based on this info.
Are Zestimates Illegal in CT?
In CT, you must have a license to issue appraisals and charge for them. According to the state statutes:
“Real estate appraiser” means a person engaged in the business of estimating the value of real property for a fee or other valuable consideration.”
No person shall act as a real estate appraiser…without the appropriate certification…unless exempted by the provisions of sections 20-500 to 20-528.
Exceptions would be:
…any person under contract with a municipality who performs a revaluation of real estate for assessment purposes…any licensed real estate broker or real estate person who estimates the value of real estate as part of a market analysis…
I don’t know if the Zestimates are illegal in CT or elsewhere. But I do know that Zillow.com has an issue with Zestimates at least being perceived as such.
| Discussion: 3 Comments »
I Hate to Tell You, But Your Agent Just Lied
April 16th, 2007 categories: Home Buyers, Home Sellers
I just had to tell someone that their agent lied to them. I didn’t want to do it but it was true. Here’s the story…
I get a call from a guy who is a friend of a friend. He just put in an offer on a house but he doesn’t trust his agent, for many valid reasons. Our friend referred him to me and we spoke. He told me that he didn’t have an exclusive buyer agency contract so I was free to talk with him.
I gave some advice on the house he put an offer in on - like how to check the town’s records to verify square footage, taxes, etc. I asked if the agent had run comps - no. Had the agent asked about the status of the leases (it’s a rental) - no.
His offer on the property was rejected and so we made plans to work together. I started to send him listings and there were two properties that he really wanted to see. I set up showings for the weekend.
I get a call the day before the showings and the buyer leaves me a message telling me that he found his exclusive buyer agency agreement - he didn’t remember signing it - and it’s good until August. He’s not sure what to do.
I call him back and the story gets better. The buyer called his agent about the two properties I had sent him and the agent claims the properties are no longer on the market. I say to the buyer, “That’s odd. Normally I get a call from the agent saying the properties are under deposit if I have a showing scheduled.” The buyer says to me, “Could he be lying?” I say, “Well, let me check on the properties and get back to you.” (Note: Legally, one agent cannot interfere with another agent’s client, so I have to be very careful about what I say.)
I call both listing agents - two different companies. According to both agents, both properties are still on the market and neither one has received any offers.
I call the buyer back and tell him this. We talk for a little while and I recommend that he confront his agent about the situation, while still giving him the benefit of the doubt. When I finally heard back from the buyer, he said that he went to see one of the properties, liked it, and put in an offer. He told me that the agent claimed that one of the properties was originally listed in another town and that’s why he couldn’t find it, but he didn’t address why he hadn’t found the other property. Either the buyer believed him, wanted to believe him or didn’t want to deal with having to fire his agent.
So, I had to tell the buyer that their agent lied to them. Why would an agent lie to their client?
- –The agent practices dual agency and really is working for the seller.
- –The agent is primarily a listing agent and wants to work mostly with listings - buyers are too much work.
- –The agent wants to sell the buyer one of his properties and will steer buyers to his listings or in-house listings.
- –The agent doesn’t think the buyer is serious and so doesn’t want to spend that much time with them.
- –The agent is incompetent - and yes, agents who have been around for 30 years can still be incompetent.
- –The agent is in it for themselves.
Now that the buyer is faced with picking an agent who will actually represent their interests, show them all properties on the market, and fight to get them the best deal possible, and an agent who is a warm body and who lies to them, the buyer picks the lying warm body.
I’ll never understand…why would someone entrust the largest purchase of their lifetime to a weasel?
Needless to say, I am disappointed but mostly for the buyer. He will get a bad deal and will have a bad experience. And I will hear all about if from our mutual friend. I can do nothing but sit back and give guidance from afar, knowing that I would have done a much better job.
| Discussion: 2 Comments »
Should You Buy or Should You Rent? - Great Buy Vs. Rent Calculator
April 15th, 2007 categories: Home Buyers, Mortgages & Finance
This is a great Buy Vs. Rent Calculator, courtesy of the New York Times.
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Fair Housing in Connecticut
April 14th, 2007 categories: Central Connecticut News & Information
This post on fair housing is appropriate for the month of April for a few reasons:
- –April is Fair Housing Month
- –The Department of Housing and Urban Development (HUD) recently released its 2006 annual report called “The State of Fair Housing.”
- –I just began reading Susan Eaton’s book, “The Children in Room E4.” The book is primarily about the state of public school education, focusing on a particular child at Simpson-Waverly school in Hartford, CT. However, Susan Eaton does a great job of laying the foundation for and explaining the reasons why a city like Hartford is so segregated - including pointing to the housing steering and redlining which drove many whites out of the city and kept blacks and Hispanics in the city. I thought her book would give some historical context to the topic of fair housing.
According to the HUD report, there were over 10,000 reports of housing discrimination in 2006, an increase over last year by 1,000 and almost a doubling of complaints since 1998 which had 5,880.
The two largest reasons for complaints were discrimination based on disability and race - 40% and 39% respectively. The complaints mostly had to do with different “terms, conditions, privileges, services, and facilities in the rental or sale of property.” This category includes things like different deposit amounts being required to rent or charging higher rent.
I have attended the required fair housing training and I’ll admit that fair housing is complicated. For example, there are different rules for owner-occupied rental housing versus non-owner-occupied. There is also a great deal of confusion about treatment of people with disabilities such as what is a disability and what steps landlords must take to make reasonable modifications or allow tenants to make modifications at their own cost.
Part of me is not surprised that renters face the kinds of challenges they do for fair housing because many landlords are novices when it comes to fair housing -they own a couple of properties and aren’t tied into a national group which requires training.
But there can be no excuse for discrimination by real estate agents, who are required to attend training (at least in Connecticut). But if you read Susan Eaton’s book, you will see that the real estate industry has a shameful past in Hartford -and by real estate I mean Realtors, mortgage lenders and insurance companies.
“…up to and after WWII, the National Association of Real Estate Officials openly acknowledged a policy that restricted African Americans (and other new arrivals) to a few outlined areas.”
“Through the 1970s, a Hartford-based research and advocacy group, Education/Instruccion (EI), investigated housing discrimination…Real estate agents made disparaging remarks about black and Puerto Ricans to the white researchers. They warned whites off racially mixed neighborhoods. And they steered blacks and Hispanics into developing ghetto neighborhoods and suburban enclaves populated by minorities.
EI’s taped transcripts caught agents describing racially transitioning Blue Hills section of Hartford to a white buyer as a ’slummy and high-crime area,’ ‘not safe,’ a bad investment,’ and ‘a depressed area.’” The Department of Justice did file suit against eight of the nine largest real estate brokerages in the Hartford area for these practices.
Mortgage lenders and insurance companies have been just as bad, with insurance companies refusing to insure homes in the North-end of Hartford or lend to borrowers who were buying houses in certain areas - called redlining.
If you’d like to read more about fair housing and predatory lending, visit my post called “Home Buying 101 - Step 4: Know Your Rights.”
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FHA/VA/CHFA Mortgage Tidbits
April 13th, 2007 categories: Mortgages & Finance
I attended a great government mortgage seminar in Hartford yesterday and I have some little nuggets of info I’d like to share related to government loans.
FHA Mortgages
- –Borrowers may be able to qualify for an FHA Mortgage with credit scores as low as 600.
- –There are no purchase price limits.
- –No termite inspection is required anymore.
- –There are no income limits.
- –You don’t have to be a first-time home-buyer.
- –Borrowers can write off the monthly mortgage insurance premium as well as the upfront mortgage premium.
VA Mortgages
- –Most VA mortgages have a limit of $240,000 but the broker who gave the seminar yesterday stated that he has an investor who is willing to do VA mortgages up to $417,000. WOW.
- –You don’t have to be a first-time home-buyer.
- –Veterans with service-related disabilities do not have to pay the VA funding fee.
- –There is no monthly insurance premium.
- –You cannot have unmarried co-borrowers - either get married or only one person can be on the loan.
CHFA Mortgages
- –You must be a first-time home-buyer or not have owned a home within the last three years. If you are buying in a targeted area, this rule is ignored.
- –There is a recapture tax which kicks in (50% of the profit or 6% of sales price, whichever is lower) if all three of the following happen:
- —You sell the house within 9 years;
- —Your income is above CHFA’s income limits at the time of the sale; and,
- —You are making a profit on the sale.
| Discussion: 5 Comments »
