Okay. I woke up in the middle of the night like a good 40 year old. I couldn’t get back to sleep because I was thinking about an out of town client who relied on Zillow more than he did me. It kind of became a real problem for me.
And here is why. When you check out Zillow and you know nothing about the local market or neighborhoods, you can draw wrong conclusions. On Zillow.com, there is a tab that shows you recent sales. They must mainly sort those by zip code, not the neighborhood. Often, you see sales from a different neighborhood that can make you think you are about to pay waaaay too much or you are getting a bargain. If you enter a cheaper listing that is by a nice area, you can think the cost per square foot is a bargain in comparison to those recent sales……….and the other way around. Apples to apples and oranges to oranges.
Another thing that I had to explain was how the assessed value (Tax Bill) worked. See, the house he was wanting to buy had been owned by the seller for several years. It showed a taxable value that was much lower than it’s fair market value. What’s up with that? Well, the PVA often only reassess the taxable value when the house is sold. The new assessed value will be the sale price. If the house hasn’t sold in several years, usually the taxable value will be lower.
Every so often, the PVA will send out its people in their little white Toyota Pruises to snap a picture of your house and then come back to the office to compare it to recent sales. They don’t actually go inside the houses. It is kind of hard to get a feel for value from only the outside of the house. Plus, they know that tax payers don’t want to over pay, so they are pretty conservative. That may change in today’s world of budget shortfalls.
I own a house that I know I can sell for about $160,000. I have been paying taxes on only $135,000. The house next door sold for that much about 4 years ago and they guessed mine would be the same. I’m not going to call to tell them that my house is under assessed!
All this leads me right into the next issue. They have an ariel map of the neighborhood with all the assessed values. Based on what I just told you above, you are right to assume that most of the dollar figures that appear to be painted on the roof tops of the houses are much lower than what most of them are probably worth.
You should have seen me trying to explain all this to my untrusting client. I am sure he must have thought I was making all this up as I was telling it. What I had to do was pull recent sales from within the neighborhood. I was able to show him 2 other houses that were the exact same model as the one he wanted and had sold within the past 6 months. We did a few adjustments for thing like one had a fenced yard and newer appliances, and came up with what the real market value was. It was much higher than what the seller had been paying taxes on for all those years.
So, feel free to use Zillow. It is a useful tool. But realize that you need to know how to interpret the info that they give you. You always want to compare a house you want to make an offer on to similar ones within the same neighborhood that have sold within the past 6 months.