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On the House | Don’t judge home value by hot new Web site

By Al Heavens<br />Inquirer Columnist<br /><br />A little while back, I received an e-mail from a reader pointing me to Zillow.com, the home-valuation Web site launched in February.<br /><br />”All you do is punch in your address and zip code, and it gives you a value for your house,” the reader wrote. “And it looks to me that values are really dropping, especially in the suburbs.”<br />I urged the reader to calm down. Computer geeks on the West Coast proved years ago that they know nothing about real estate markets in other areas. Then I clicked on Zillow.com, punched in my address and zip code, and sure enough, there it was, viewed from a satellite high above Earth, my house. At least, I think it was my house.<br /><br />The value listed was the assessed value, on which my annual property-tax bill is based.<br />The assessed value is less than I bought the house for, less than what the previous owner bought it for, less than the appraisal when I refinanced, and certainly less than what the insurance company said it would cost to replace the house.<br /><br />The geeks also got my 2005 tax bill wrong by almost $700, which means that if the IRS looked at Zillow.com, I’d be in big trouble. Fortunately, I have documents from my lender and the town I live in to back me up.<br /><br />For every house I looked at on Zillow, there were no recent sales figures available. “County data is insufficient,” the Web site said, then urged me to return because data were always being added.<br /><br />Not in the two months I’ve been tracking this, they haven’t.<br /><br />I wondered if I might be doing something wrong. Then I heard from Art Herling, regional vice president for Long & Foster, after a house in Oreland valued by Zillow.com at $217,000 sold for $312,000.<br /><br />”The Internet tries and tries and tries, and maybe they’ll figure it out someday,” Herling said, “but they’ve figured out other businesses much more quickly than ours. So here’s to Mr. Zillow: The human being is still of great value to the real estate business.”<br /><br />Zillow says it bases its values, or “zestimates,” on trends over time in a zip code, using a formula devised by mathematicians and computer geniuses. It also acknowledges that its system is still “beta,” geek-speak for needing work.<br /><br />John Duffy, owner of Duffy Real Estate in Narberth, had his son, who works for him, analyze prices of 20 houses his firm has sold since Zillow’s debut.<br />For the most part, none of the zestimates even came close to the sale price. The biggest difference was for a house on Waverly Street in Center City. Zestimate: $62,000. What it sold for: $712,000.<br /><br />”The problem for us is that sellers who’ve seen Zillow are confused about what the house should be listed for, and the buyers are thinking they should get the house for $62,000 and not for prices comparable to what they’ve been selling for in the neighborhood,” Duffy said.<br />In the meantime, I’ve found another new Web site that is more on the money than Zillow, although it, too, is often short of data.<br /><br />It’s called RealestateABC.com, and, unlike Zillow, it lists the most recent sale prices and plots them on a map, so you can see your house and comparable homes.<br /><br />This Web site acknowledges that it would do a better job with better data, and invites the user interactively to supply that information, which I assume it will check out.<br /><br /><a href=”http://www.fredglick.com”>Fred Glick, president of USLoans L.L.C. in Philadelphia</a>, said the danger was that “people who click on to Zillow.com and other sites think they can do the same job as the professional.” He laughed when he saw houses in his pricey Center City neighborhood valued at $80,000.<br />”I can probably go on the Internet and learn how to remove gallbladders, but would you want me to do yours?” asked Glick, who uses competitive market analysis, better Web sites, and appraisers to figure prices.<br /><br />The issue here is that the price of a house is based on more than just an algorithm and a computer program. It’s condition and amenities and neighborhood and school district – you know the drill.<br /><br />Even though the supermarket posts the price above the bin, you still need to squeeze the melon before you buy it.<br /><br />Could you imagine what would happen if we paid a flat tax on sale price? My annual taxes would triple. For a lot of people, even the fact that real estate taxes are deductible would be small comfort.<br /><br />”That would create a whole other set of issues that few would want to deal with,” said Don Kelly of the Appraisal Institute in Washington.<br /><br />I think most people have a good idea of what their houses are worth. They keep track of sale prices, they talk to their neighbors. So if they see houses selling in their neighborhood for $312,000, but Zillow says they should only expect $217,000 for theirs, sight unseen, they know when they are being hung out to dry.<br /><br />Still, Kelly said, “our members think Zillow is the best thing to happen to us in years. A lot of them are advertising on the site, so [people] can turn to us when they need really reliable numbers.”<br /><br />Zillow has another plus, and not by design.<br /><br />”It is helping people get excited about real estate,” Kelly said. “And in a slowing market, we all see that as a good thing.”

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