Profile picture for user962381

HOW DO YOU DETERMINE CHANGE IN VALUE

i WAS WONDERING WHERE YOU GET YOU NUMBERS? AND WHY MY HOUSE AT 1211 YUKON HAS DROPPED 15000 DOLLARS IN THE LAST FEW WEEKS WHEN THE OTHERS COMPERABLE HOMES ON THE STREET ARE MORE ORE LESS STABLE?  ONE SMALLER HOME EVEN SHOWS AN INCREASE OF 5000.

THIS MAKES NO SENSE.
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July 09 2012 - Lake Arrowhead
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Profile picture for Pasadenan
Enlarging the chart for the past year, adding a scaled Zip-Code Zindex trend scaled for the sold price & date, and adding "trend curves" to try to extrapolate potential market value, considering the REO list price is substantially below present estimates:



full sized image:
http://photos3.zillow.com/is/image/i0/i14/i2760/IS-bjp2mvxbhjrx.jpg

Extrapolating off of the Zestimate trend, and the shifted 12 month running average does not seem to provide useful/reliable estimates.

Extrapolating off of the Zindex trend scaled for the average of the estimates comes up with about $293k.  Extrapolating off of the Zindex trend scaled for the purchase price comes up with about $277k.

The $244.9k REO list price is substantially below these estimates. (11.5% to 17.5% low).  But Zillow Research did a white paper on REO pricing determining that REO's, foreclosures and other distressed properties tend to sell between 10% and 40% below market value, depending on the area.
Price Differences Between Foreclosures and Non-Foreclosures
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July 11 2012
Profile picture for Pasadenan
Trying to extract a better estimate of present market value by scaling the Zindex trend to the specific property in question (same procedure as mentioned in last post):


full sized image:
http://photos1.zillow.com/is/image/i0/i14/i2745/IS-1mj6ls3du52e5.jpg

I'm coming up with an approximate value of $290k to $295k.

And as a check, comparing it to the estimate from
homesand.net
That site indicates $317.9k, range $294.8k - $330.45k

I'm sorry to see that the property is now indicated as a Bank owed, REO for sale, recently foreclosed on.  Asking price is $244.9k.  Same as it was listed for for a couple weeks last month.

Conditions of REO's are difficult to determine without a site visit, and typically sold "as is" without corrections.
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July 11 2012
Profile picture for Pasadenan
Using a 15% increase multiplier on the Zindex trend for the Zip code (based on taking the ratio of the average of the estimates over time to the average of the Zindex over time), we get the following revised chart (to compare the index trend to the running average better):


full sized image:
http://photos3.zillow.com/is/image/i0/i14/i2743/IS-1mj7e2r29kvh9.jpg
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July 11 2012
Profile picture for Pasadenan
Just for curiosity, I thought it would be interesting to average the estimates for each of the 4 properties in that location, and to average the 12 month running averages for those properties, to compare to the Zindex trend for the Zip Code:


full sized image:
http://photos3.zillow.com/is/image/i0/i14/i2741/IS-1mj836f7upkd9.jpg

The avg of 12 month running average appears to be close to the Zindex for the zip-code with a multiplier, indicating these properties are slightly above the median for the zip code, and that the 12-month running average does a reasonably good job of filtering out statistical "noise".

But obviously, the average of the 4 property estimates indicates substantial "fluctuation" still, indicating one needs a lot more than 4 properties to cancel out the statistical fluctuations.

I have asked Zillow's statistical/research/economist department multiple times to do a research study on the fluctuation issue, but they continue to respond "no one besides you and a few of us are interested".  I don't think that is the case; I think most people are interested.  Since they wouldn't do it, I started my own study, but then my hard drive crashed and I lost all the data I had collected to do the study, and didn't feel like starting over (yet).

If interested in such a study, you should E-mail Stan Humpries, the head of their research department and their chief economist.  (click on his name to get to his profile, then use the "contact me" button under his avatar to write the Email)
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July 11 2012
Profile picture for Pasadenan
Here is a comparison chart of the 12 month running averages of the same 4 properties, with the "sold" prices/dates shown:



full sized image:
http://photos3.zillow.com/is/image/i0/i14/i2715/IS-1mjj01gr80kt9.jpg

Even so, the curves still cross, and there doesn't seem to be an explanation for 1221 mini-bubble in 2009, nor why it wasn't subject to the typical national bubble, that peaked in 2006 or 2007 for this area.

One thing for certain, what buyers decide to buy at any given point in time, and what they are willing to pay for it, is not "fixed".  Part of that is the value of money is not fixed, and the mortgage interest rates offered at any given point in time are not fixed.
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July 11 2012
Profile picture for Pasadenan
Here is the estimate trend comparison chart with the 3 closest neighbors (excluding those on the other side of the street):



full sized image to read the text:
http://photos3.zillow.com/is/image/i0/i14/i2649/IS-1mkb6fwg8w8yl.jpg

It appears the Zillow estimates for 1221 are much more volatile than the others.  Possibly due to the Feb 2004 sold price (which was obviously "land only", since it says built 2005).
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July 11 2012
Profile picture for Pasadenan
By the way, I consider anyone that takes one CMA as "definitive" also "foolish".  (Especially as many of those are only based on 3 recent "comparable" sales that are often not very comparable).

Even Jesus stated that the Jewish law states that you need at least 2 witnesses (sources) for discerning "truth".

One possible method of getting better numbers is get estimates from at least 5 independent sources, throw out the top and bottom, then average the rest.

Since almost all buyers, and almost all sellers will select a licensed Real Estate agent to help with their transaction, most will likely have at least 1 CMA as a reference point for any given transaction.  And most people are going to believe their personal representation that actually saw and evaluated a property more than they would a machine generated statistical number with no site visits and no specific evaluation.
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July 11 2012
Profile picture for Pasadenan
No, as someone that has absolutely NOTHING to do with Zillow, I don't have to admit that, because I absolutely don't believe it.  Anyone that would use one number that has a 50% chance of being more than +/-10% different than "present market value" from the posted number for a "purchase decision" or a decision to "accept an offer" without any further evaluation nor any research for other numbers... is "foolish".

I don't believe anyone uses the "suggested list price" or "compare to ..." on a sales tag in a store either.  They compare it themselves to what else is on the market.

As there are plenty of disclaimers about what Zillow provides, and plenty of explanations, even with a "mouse over" explanation where the estimates are shown...  people are only looking at the numbers as one data point in a collection of data items they are reviewing about a property and neighborhood.  No one takes it as a "definitive source", especially as it claims it is not.
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July 11 2012
Profile picture for user962381
you have to admit that people comming to zillow are looking for a resource to determine if the price someone is asking for a property is fair..or what they should ask when putting their own property up for sale. and this is what Zillow represents that it is. Not a place to view trends in the market place.
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July 10 2012
Profile picture for Pasadenan
Regardless, Zillow estimates are only a "starting point", and completely ignore deferred maintenance, neighborhood nuisance issues, and remodel restoration & rehabilitation since last purchased.

County Assessors do "re assessment" at most once per year.
Realtors are highly unlikely to do new CMA's on a property more than once in 3 years, and are often using data that is up to 6 months "old".
Appraisers tend to only appraise if someone requests it for a loan, which often is not more than once every 7 years.

Using 3 month or 6 month or 9 month or 12 month running averages on Zillow's estimates is likely to be about as "timely" as most other common "estimating" sources.  One only needs to filter out as much "fluctuation noise" as relevant for the specific purpose one wanted the estimate for.

If anyone really cared about "market value" for a specific date (for example, estate tax purposes...), one would pay a licensed appraiser for an appraisal and would not rely on any free AVM nor CMA nor other "sources".
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July 10 2012
Profile picture for Pasadenan
If you look at the "terms of use" for the website, you will see that the data and the estimates are for "personal use only".   It would be illegal for any Financial Institution to use the estimates for any purpose, and it would get them sued.

Zillow is one of the few AVM's that provide trends and statistical analysis of the estimates.  There are 1000's of AVM's in use in the country, many have been used for almost 20 years now.  Zillow is fairly new to AVM's, as Zillow only started in 2005.  Most AVM's are "private".  Hundreds are "pay for service".  Still there are dozens of "free" ones.

If one doesn't like what Zillow provides in their AVM, you can check out some of the other free ones.  Perhaps another is more to your liking?

Realestate.com/homepricecheck

homes.com

Homesand.net

Eppraisal

realquest.com express

cyberhomes.com

trulia

chase

homegain

Zillow is one of the few that does new estimates nominally 3 times a week, based on new "recently sold" data that comes into the county records.  For the charts, they average the estimates for the entire month, and only show one estimate for the month, except the most recent, which is the present (most recent) estimate.

I find the estimates extremely helpful and useful.  I'm sure there are plenty that find them "useless", but I don't know why someone that finds them useless would "subscribe" to have E-mail updates sent on it.  I certainly don't.  I know what data I'm looking for, and specifically go to get it.  I also use the neighboring estimates of "similar" to do "averaging" since I obviously know how to download the data underlying the charts.

The "local info" pages also has good data trends that I find quite useful, and I can often get a much better idea of a value of a property by normalizing an index trend for a specific property.
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July 10 2012
Profile picture for user962381
True true,

what I am saying is that zillow is seeming to claim that a persons home is worth what the estimate claims....what they should be saying is ..if you take an average of the 70% interval over the last year you can get a good estimate of what your home was worth. Of course, if they did that....nobody would visit the site.
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July 10 2012
Profile picture for sunnyview
"lending institutions are not interested in a 70% confidence interval. "

You are right. That is the key reason that lending institutions do their own appraisals and do not rely on Zillow or tax assessments for values.
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July 10 2012
Profile picture for user962381
and a valuation the smooths out over a 9-10 month period does not have "practical" value. Zillow seems to claim these Zestimates are meaningful if they are not they should be satisfied to post only the 70% confidence interval....then see if anyone takes seriously a claim that your home is worth something....within a 200000 dollar range....meaningless
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July 10 2012
Profile picture for user962381

Yes, I understand what you are saying however, no one is going to attach any significance to a price range of between 100000-200000 dollars. People look at a value determined at a frozen moment in time. lending institutions are not interested in a 70% confidence interval. My point is that anything that effects the "meaningless" 30 day single point should be fairly consistant. take for example the homes that bracket mine. 1217 yukon is down 1400 over the last 30 days. it is a pretty close match to mine in lot size and sq footage is estimated worth 16000 more than mine and is down 1400.00 1221 yukon which is valued 31000 more than my house shows a decrease in value of 51,000 in the 30 day period. the volitility between homes so close to each other makes zillows valuations worthless. Like I said a more or less stable 70% interval is meaningless in the real world.

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July 10 2012
Profile picture for Pasadenan
Zillow is dropping characters on my posts again...

"...based on one data point of $300 drop"

(I wonder if it has something to do with the method of image posting?  It never did that before).
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July 10 2012
Profile picture for Pasadenan
Posting the "running average" chart, for the "neighbor" property that the original poster claims is "more or less stable" based on one data point of 00 drop in the estimate from 30 days ago... (demonstrating again why 1 data point is "meaningless", especially a "change" that is smaller than both the tolerance range and the 70% confidence interval):


full sized image (to read the text):
http://photos1.zillow.com/is/image/i0/i14/i2590/IS-bhoyo4xh19wd.jpg
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July 10 2012
Profile picture for Pasadenan
I don't know how my last post got "scrambled" with parts of image references in the text... it was fine when posted, and fine after posting when reloading the thread to check, but it is substantially scrambled now...

The scrambled text was supposed to read:

1211:
3 bed, 2.5 bath, 2174 sqft, 8698 sqft lot size, last sold $385k 3/31/05,
tax assessed $318.8k  2011.
estimated $297.8k;
70% confidence interval $235k - $357k

1235:
4 bed, 2.5 bath, 2563 sqft, 11,160 sqft lot size, last sold $440.5k 8/4/04,
tax assessed $493.263k  2011.
estimated $364.3k;
70% confidence interval $233k - $495k
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July 10 2012
Profile picture for Pasadenan
You mean 1235 Yukon?

Haven't you looked at the "fluctuations" and "70% confidence interval" yet?
1211:
3 bed, 2.5 bath, 2174 sqft, 8698 sqft lot size, last sold 85k 3/31/05, tax assessed 18.8k 2011.
estimated X1-IA-1mlgf9aezbfcf_gme5397.8k;
70% confidence interval X1-IA-1mlgf9aezbfcf_gme5335k - 57k

1235:
4 bed, 2.5 bath, 2563 sqft, 11,160 sqft lot size, last sold http://photos3.zillow.com/is/image/i0/i14/i2551/IS-1mlgf9af0pzrx.jpg?op_sharpen=1&qlt=90&size=250,30040.5k 8/4/04,
tax assessed http://photos3.zillow.com/is/image/i0/i14/i2551/IS-1mlgf9af0pzrx.jpg?op_sharpen=1&qlt=90&size=250,30079.263k 2011.
estimated 64.3k;
70% confidence interval X1-IA-1mlgf9aezbfcf_gme5333k - http://photos3.zillow.com/is/image/i0/i14/i2551/IS-1mlgf9af0pzrx.jpg?op_sharpen=1&qlt=90&size=250,30095k

In both cases, the "30 day change" is meaningless compared to the "confidence interval".  It gives you no data of any kind.

But to really understand the estimate range, you need to look at the fluctuations over time, so I have overlaid the two for you so that you can see what occurs with the particular valid estimating method used:



full sized image to read the text:
http://photos3.zillow.com/is/image/i0/i14/i2551/IS-1mlgf9af0pzrx.jpg

Surely you can see that the fluctuations are in the same magnitude, and that neither has less "random change"....

and then the "shifted running averages" so that you can see that the fluctuations are meaningless:



full sized image to read the text:
http://photos1.zillow.com/is/image/i0/i14/i2552/IS-1mlg3cwtgd4rh.jpg

By focusing on the wrong part of the data and putting too much emphasis on the wrong parts of the data, you are doing the equivalent of straining gnats while swallowing camels.
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July 10 2012
Profile picture for user962381
Oh well then why is the house 2 doors down with the same sq footage and very close on the lot size down 300 and my home is down 15000? there should not be such a difference in values for like homes mear feet away from each other if the model works
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July 10 2012
Profile picture for Pasadenan
1) Calculate new Zestimates using a non-linear learning model method, modeling all recently sold non-distressed arms length ownership housing unit sales in the county to the "county records data", and extrapolating estimates from the model for all ownership housing units using the county record data and owner/agent provided data.  (Done nominally 3 times a week, with the last run this past Sunday night).

2) Compare that to the archived estimates from 30 days prior.

3) Subtract.

In other words, it is a meaningless useless number that should be ignored.  The 70% confidence interval published is larger, and the tolerance range published for the county (by comparing each recently sold to the estimate each fiscal quarter year) is larger.

It is not supposed to "make sense".  If a 3rd grader could be doing the estimates and getting a narrower tolerance range, they would.  The estimates are supposed to move independently of each other, and not in unison.  Physics majors didn't think the theory of relativity made any sense either.

All Realtors that tell you they "know" the "exact value" of a house are "lying to you".

Read the FAQ "what is a Zestimate".
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July 09 2012
 
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