If only there was a foolproof method for figuring out what a property is worth on the open market. Then it would be easy to know how much to offer so that you wouldn’t overpay, or risk losing out because you offered too little. Home sellers could price to sell without having to endure a series of price reductions and months on the market.
Some buyers and sellers turn to Internet sites like Zillow.com to help them through the valuation quagmire — with varying degrees of success. A San Francisco home buyer recently got caught up in this approach when he made an offer on an attractive new listing.
The seller’s agent advised the seller to list under the $2 million mark to stimulate interest. The seller, who understood that the market was challenging, took this advice and listed the property for $1.895 million.
The buyer relied on Zillow.com for pricing information when he made his offer. As it turned out, he offered too little. The seller received two offers and the property sold for $2.1 million.
The problem with Internet sites that purport to tell you what a property is worth is that they usually derive their data from the public records. This data might include such things as the last recorded sale price, the square footage or numbers of bedrooms and baths.
The sale price alone can be misleading in neighborhoods where there is a lot of variability in the size, price and condition of houses. Also, the square footage figures and room counts recorded in the public records are often wrong, either because they’re out of date or they weren’t right in the first place.
For example, a home recently sold on Trestle Glen Road in Oakland, Calif. The information provided by Zillow indicates that the property sold for $951,000. The additional information indicates that the house has two bedrooms, one bath and 1,470 square feet. If you were to rely on this information and pay around $950,000 for another two-bedroom house in the neighborhood, you would probably pay too much.
Actually, the house has three bedrooms, two bathrooms and a usable basement. There is also a detached studio on the property with a two-bedroom, one-bath guest cottage attached that was built with a building permit. The two-bedroom, one-bath, 1,470-square-foot house really has a lot more to offer for $951,000 than was indicated on Zillow.com.
Before the recent sale of the Trestle Glen property, Zillow gave it a value of $726,683. If you’d used this information as a guide to the appropriate offer price, you’d have been out of luck. The sellers listed their property at $849,000 and received six offers.
HOUSE HUNTING TIP: The best way to find out what a property is worth is to consult with a real estate professional who is knowledgeable in the area in which you want to buy or sell. The Internet has revolutionized the real estate business in a positive way. But you can’t expect the Internet to factor in the nuances of pricing that can only be understood through years of experience selling homes in the area.
It’s helpful to visit Sunday open houses to get a feel for local property values. Keep track of what sells and for how much, and what doesn’t sell. The key is to see the listings before they sell. Then you’ll understand why the three-bedroom house that had been completely remodeled sold for so much more than the house next door that hadn’t been touched in 30 years.
THE CLOSING: It’s hard to find this kind of information on the Internet.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.