Here’s a quick trend graph for you of all sales in the Pocket-Greenhaven area of Sacramento over the past three years. What stands out to you? What do you see?
Real Estate Appraisal
Appraisers vs. Machines: What do you think of websites like Zillow?
People ask me sometimes what I think about websites like Zillow or Cyberhomes. In short, I don’t think computers do as good of a job appraising properties as real humans. Call me biased, but there are some things that real people can still do better than machines. However, though these websites cannot fully replace real estate appraisers, they do have a place to help gain a ballpark figure for a house (please take that with a grain of salt though because figures can still be way off). Additionally, I’m a fan of the multi-year trend graphs that Zillow produces.
The Sacramento Bee actually published an article last Friday about this very topic entitled Home Front: Appraisal sites on Net often fail to pin down accurate prices. The bottom line is that websites like Zillow seem to have greater accuracy in tract markets with ample sales, but even then they are only so good because they cannot sift through value indicators like condition, important neighborhood boundaries, upgrades, and a local appraiser’s knowledge of the market area.
I ran some test cases over recent work I have done and found the following:
– My house (tract): Zillow was 28% high / Cyberhomes was 24% high.
– Elk Grove house 2.0 acres: Zillow was 46% low / Cymberhomes had no value.
– Tract House in Davis: Cyberhomes was 4% high / Zillow was 2.5% high.
– Sacramento River property: Zillow was 40% low / Cymberhomes had no value.
– Tract House in Galt: Zillow was 9.5% high / Cyberhomes was 5.0% low.
What do you think of these websites? What do you think they’re useful for? Do me a favor and run your property by Zillow and/or Cyberhomes and let me know the results.
Transformation from an ugly cinder block house to a remodeled Sacramento beauty
I made this one-minute “before & after” video for a client (Housing Group Fund) to help show one of their recent first-time home buyer projects in Sacramento. I appraised this property and I have permission to post the information here. This is a block construction house (cinder block) near the Fruitridge area that was purchased recently as a bank-owned fixer and then rehabbed extensively throughout. One of the features I really like about this remodel is that there is now sheetrock and texture on the interior walls so the house does not have a typical “block” feel to it. If you are reading in RSS, you can view the video directly here.
It’s amazing to see the difference from beginning to end. What do you think?
New Fannie Mae Appraisal Guideline is Old News to Appraisers
I had several emails arrive in my inbox yesterday to announce Fannie Mae’s “new” requirements for appraisers beginning September 1, 2010. In short, one of the things they are cracking down on is that appraisers must have knowledge of the local market as well as data sources for the market. Here is a snippet from Inman News:
“Fannie Mae has put lenders on official notice that they can only use appraisers who are knowledgeable about the area in which they are being asked to value property, and who have the ability to access records on recent sales in those markets.”
I don’t want to be the bearer of bad news, but this is nothing new for appraisers. We are supposed to be “geographically competent” already (know the local market) and it’s unthinkable that an appraiser would attempt to do an appraisal on a property when he/she does not even have data sources. In short, I understand the need for Fannie Mae to step forward here in light of some of the horror stories from HVCC, but this isn’t an earth-shattering revelation for appraisers because USPAP (our rules) already mandates us to know the local market. However, depending on how this rule plays out, that could be the interesting part.
My big question is how will it be determined that an appraiser is “knowledgeable about the area” where he/she is appraising? Will there be an essay test, quiz, series of questions to answer, or will it be based on the appraiser’s proximity to the property (say, the appraiser has to live nearby)?
What do you think about this new rule? How do you see it impacting the real estate market? Do you think it will increase the quality of real estate appraisals? What are the positives, negatives and potential consequences?