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Real estate

Zillow is full of beans

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What with the proposal that the government should force mortgage rates down to 4 percent, I mentioned to M’hijito that we should be prepared to re-refinance the Investment House, the place he and I are copurchasing partly as shelter for him and a paying roommate and partly as what we imagined would be an investment. He said he didn’t think we’d qualify, because we’re now upside-down in that house. Whence this intelligence? Zillow!

So I thought I’d better check Zillow to see what it claims the house is currently worth. Yup: the site estimates its value at $188,500, which is $46,500 less than we paid for it. But… Directly behind our house is a nearly identical cute little brick house in foreclosure. It has been partially renovated (ours has been completely renovated), but the owners dropped out of the picture before they could finish the job. Flooring is down to the concrete; bathrooms are unfinished; it needs a new roof. Zillow values that wreck at $225,000!

Our house has a new roof, new air conditioner, updated wiring and plumbing, and has been completely gutted out and rebuilt inside. Makes sense, eh?

If Zillow is figuring on a straight square-footage basis, at $188,500 our house is worth $143 a square foot. The house behind it has a 500-square-foot add-on. That should add $71,500 to its value, over the value of ours; in that case, it would be worth $260,00.

Interesting. I wondered what Zillow thinks my place is worth. Entering my address brought up an estimate of $284,500, or $52,500 more than I paid. Noticing a “recently sold” icon to the north, I clicked on it, thinking it was the rental house that Manny, the font of all neighborhood gossip, said was on the market.

But no! It was my neighbor Sally’s house, directly behind me. Zillow claimed it had sold in October for $192,500.

Say what? Sally is still very much in evidence. No “for sale” sign has ever gone up, though sometimes houses around here sell with no notice. But if the house had been sold last October, surely Sally would have moved by now.

A little further investigation showed Dave’s Used Car Lot, Marina, and Weed Arboretum (now under new management) also sold last October, for the same price.

Hmh. Well, these houses are on two parallel roads with the same name, one ending in “Lane” and one in “Way.” The street numbers are the same, so that packages and workmen meant for 501 West Erewhon Way often end up at 501 West Erewhon Lane, and vice versa. Clearly, someone got the address wrong, and Zillow picked up the error. Not enough, however, to post a picture of Dave’s house when you click on Sally’s: what comes up is a fine photo of Sally’s front elevation.

It gets better. Despite the alleged fire-sale price, Zillow values Sally’s house at $300,000, well above what any house in this neighborhood has commanded over the past two years. Her house is old and unrenovated, replete with the original harvest gold Formica counters and matching appliances. It’s clean and neat, but it needs a paint job, a new roof, a new air conditioner, and a full interior remake to bring it into the three-hundred-grand range.

Dave’s house is valued at $289,500, despite the $192,500 selling price. It is two square feet larger than mine, sits on the same-sized corner lot directly across the street from mine, has a pool about the same as mine, and landscaping comparable to mine (but lacking fruit and shade trees). It was built in the same year as mine by the same builder. It has a minuscule, dark kitchen, needs a new roof and new air conditioner, and soon will need new pool equipment. My house, in contrast, has a large, bright kitchen with a skylight (one of four in the house), sunny and open rooms, gorgeous tile floors throughout, a park-like yard with not one, not two, but three beautiful outdoor sitting and entertaining areas, a new roof, new kitchen appliances, new pool equipment, new bathroom everythings: Zillow values it at $284,000.

And this makes sense…how?

Zillow is the last place I would go to get a reasonable estimate on the value of a house. If you’re interested in buying a house, get your Realtor (and do engage one who alleges to represent the buyer, despite the speciousness of that claim) to run the comparables in the area and show you a printout. Visit those houses to be sure they really are comparable to the place you covet.

If you want to know what your house is worth, any Realtor will run the comps for your place. This is generally a free service, offered in hopes that you will list with the Realtor who is nicest to you. Ask a real, live Realtor, not Zillow, about the value of your house.

Can’t sell the house? Try swapping

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One of the local television PlayNooz programs claims that some people have taken to trading houses when they couldn’t sell them—no indication of whether these prospective traders are having any luck at the enterprise, though.

It’s an interesting idea. A year and a half ago, CNN reported that some homebuilders were taking old houses in trade for new ones. Not everybody wants to live in a cheaply built house in the remote and treeless suburbs, but if you do, trading could be a way to get there.

It appears that the most likely use of this strategy is to get yourself from one city to another. Few people would trade a $300,000 house for another $300,000 house in the same city, unless the city is so huge that there’s some value for each party in moving closer to their places of work. Exactly how this would work for the mortgage holders is somewhat fuzzy. Apparently each “buyer” gets a new mortgage and uses it to pay off the existing mortgage. Nice trick if you can do it, in the present lending environment. Both traders would need sterling credit and a long track record of paying on time.

Several sites are in the business of helping would-be house traders get in touch with each other. Check these out:

Craig’s List has a house swapping category. Some of these are vacation or short-term swaps; some are efforts to make a permanent trade. The one here in Phoenix looks pretty active: a lot of the offers are local, but some are coming in from all over the country. Check the site in your area—look under “Housing Swap.”

OnlineTrading.com charges $19 for the privilege of using its site. Turn off your sound before hitting this site: they have a particularly grating ad that starts blatting at you the instant you get there. The site called House4Trade.com is actually a front for OnlineTrading.com; with that sort of oiliness going on, I’d be careful of this outfit.

RealEstateExchange.com appears to be a separate entity. They’re advertising trades of commercial as well as real estate properties. This site has quite a lot of information posted, and its proprietors say they actively pursue scammers.

If you decide to go this route, you probably should consult a real estate lawyer to be sure the contracts are written correctly and your interests are protected. If you can find a Realtor who is experienced in trading property, that also would be advisable, though I have no idea where you would find such a person.

Foreclosure: Not all bad

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Yesterday as I was chatting with the tile guy at the former home of Dave’s Used Car Lot, Marina, and Weed Arboretum (recently foreclosed upon, bought out of auction for $162,500, and resold to a flipper for $192,500), up comes a perky blonde Realtor. She was meeting a buyer there to eyeball the place.

Asked what they hope to get for the place, she showed me a listing sheet: $269,900.

Well. That’s not a disaster, all things considered: if they get $260,000 for it, the value of my house (relatively) at least will not drop below what I paid for it four years ago. My place certainly won’t sell for anything near $300,000 anytime soon (it was valued as high as a giddy $375,000 during the bubble), but at least I’m not going to go broke. Yet.

Really, as long as the new resident is not another biker, another furniture-flinging berserker, or another slob, the trade-off will be worth it. Cleaning up that pigpen across the street transforms this part of the neighborhood. If the place stays halfway decent, I can get rid of some more of the shrubbery designed to screen my front windows from the view of Dave’s hovel, which will improve the looks of my place considerably. And over time, without the drag of that run-down property, values should improve. If nothing else, at least the street is now a more pleasant place to live!

Bidding Up House Prices: A new illusion?

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111208gavelThe other day I was chatting with the guy who’s painting the former Used Car Lot, Marina, and Weed Arboretum across the street, who has four clients in the business of buying, fixing up, and flipping foreclosures. When I remarked that my friends La Maya and La Bethulia had run into a situation where a rather nice little house in foreclosure was bid up in price by competing speculators, he had an explanation for that.

Ken the Painter says that bottom-feeding investors (of course, “bottom-feeder” is not a term he uses for his customers) don’t want any competition from regular folks. So when they spot someone they think is an amateur at an auction, they’ll deliberately bid up the price on a dog. From experience, they have a good feel for how much it will cost to make a place salable and how much the place realistically will fetch. So they engage a little competition with the newcomer, pushing the price above the amount that would allow for a profit, and then drop out of the bidding. This leaves the wannabe investor paying too much for a piece of junk guaranteed to burn his fingers. And that gets him out of their hair.

Nice folks, eh?

At any rate, this phenomenon represents something, all right, but it ain’t upward motion in the prices of real estate. Unfortunate in two respects, is what it is….

When foreclosure makes things better…maybe

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The former home of Dave’s Used Car Lot, Marina, and Weed Arboretum is looking pretty spiffy in its new coat of paint. Yesterday I spoke with the painter (the man works even cheaper than my guy—who would think it possible?). He gave me the grand tour of the worksite.

As it develops, they are replastering the pool, contrary to my speculation that they were just sanding and painting the interior. The back yard is already looking better with the outhouses dragged off, the dead stumps pulled, a new watering system installed, and the jury-rigged aluminum screening removed.

Ken the Painter (presumably a long-lost brother of Joe the Plumber) said that the owner is a speculator who intends not to rent but to sell, at a price hugely marked down off the going rate in our neighborhood. He said she has been buying and flipping houses steadily and having no problem unloading them.

She’s doing a lot of things right over there—removing the popcorn from the ceilings, replastering the pool, covering all the concrete in back with KoolDeck, getting rid of the hideous work sheds, pulling up all the flooring to replace it with tile. But she’s also cutting some corners: she plans to keep the ugly, worn-out dwarf-sized 1970s kitchen cabinetry, though she’s having the black formica countertops replaced. The house desperately needs new cabinetry, and the kitchen is so teensy it just wouldn’t cost that much to put in some Home Depot cabinets. She’s painting the eaves and other wood trim, but not painting the cinderblock walls on the sides and back—and especially in back, those walls really need to be painted! As long as she has the guy there, how much more could it cost to have him spray three not-very-big block walls?

So, that’s too bad. Of course, she’s not replacing the decrepit roof (which, it must be admitted, is nowhere near as decrepit as the roof next door, where Inez and Carlos the Knife reside), and she’s not replacing the ancient, loudly groaning air conditioner.

This will allow her to sell the house to someone else who likely will park his junk on the lawn and let the place go to pot. Any time a neighbor’s home sells, of course, what you get for a new neighbor is a pig in a poke. But when prices drop into the basement, you often find that people buy an older house without realizing what it costs to maintain it; once the learn that, they just let the place go. Because the have to: they don’t have enough to keep it up. And often you’ll get what around here are affectionately called “cultural problems”: people who don’t understand that in a middle-class neighborhood you don’t celebrate New Year’s by shooting your shotgun up in the air, you don’t let your pit bull run loose, you do put a muffler on your Harley, and you do store your pick-up, your trailer, and your unseaworthy motorboat somewhere other than on the front lawn.

But there’s always a chance that someone who’s thrilled to get their first house will move in, someone who will fix it up and keep it fixed up as long as they live there. That happened with Steve the Contractor’s house. Steve was a sketchy sort of guy who spent most of his time pretending to be a self-employed contractor (what he actually was doing was sitting around a lot while watching his house fall to rack and ruin). He finally was evicted—the previous owner had carried back the mortgage and it took her two years to get him out of the place—and the house was sold to a young couple who did a KILLER job of repair and renovation. To this day, the house is a neighborhood showplace.

Wish I could figure out how to unload the house downtown and install M’hijito in Dave’s house. He could bicycle to work from here. And it has a nice pool with plenty of backyard space for him to entertain his many friends. Plus it has four bedrooms, making it a lot easier for him to conduct his money-making room rental enterprise. Hm. Wonder if the speculator would take a trade….
😉

PAINT!!!!

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Lhudly sing huzzah! Dave’s [Former] Used Car Lot, Marina, and Weed Arboretum [Under New Management] is getting a paint job!

Drove in from the office and what should I see out in front but a guy on a ladder with a paint brush. That’s right: he’s actually brushing the trim, not spraying it.

It’s a miracle.

The new proprietor’s choice of colors is not what I would’ve favored, had she asked: it’s your basic sh** brown. But beggars can’t be choosers. Who cares what color it is, anyway? It’s PAINT!

Yesterday she had a fly-by-nightish crew sandblasting the pool. This means that instead of doing the job right and replastering (which the pool really, really needed), she did a cosmetic job that will last a year or two, maybe. But: hey! Get rid of the mosquito pond and you get rid of any further complaints from moi.

All the workmen she’s had over there have possessed that fly-by-nightish look: nary a company sign magneted to the side of a truck, and most certainly no hint of a contractor’s license number. Suggests she’s doing the fix-up on the cheap, as fast as she can get it done.

And those two things (quickie pool job, sketchy workmen) suggest she intends to rent or sell. If she’ll just get someone in there who’s quiet, not a criminal, not a volcanic madman, and not given to living in squalor, we’ll be good.

Despite the obscenely low price (we learned the bottom-feeder bought it out of bankruptcy for $162,500—this is a neighborhood of formerly $300,000-plus houses), just cleaning that dump up has transformed this whole end of the street. Dave’s mess was dragging all the properties around him down. This afternoon I actually felt GOOD about driving up to the front of my house, for a change. Now we have only two seriously run-down houses in our little tract, and one of those is for sale.

No question we have some dark clouds scudding overhead, boding hard times. But maybe now and again we’ll see the occasional silver lining.