Blog :: 08-2009

...But Zillow says it's worth $573,000

Many real estate agents hate Zillow.   But not for the reason you think.  When Zillow was launched a couple of years ago the word on the street was that agents would lose their usefulness in helping sellers determine their home's value.  That turns out to be far from the truth--which is that agents have to spend an awful lot of time explaining Zillow's  inaccuracies.

Here's the beef.  Zillow is a huge aggregator of data.  They use info uploaded by real estate agents (not always accurate), tax assessment data and comparable sales.  Then use a proprietary formula to calculate a "Zestimate."  But they have no way of accounting for hyper local conditions, for example, a house that has not been updated for 50 years. Or a house that backs up to a gas station.  Or a house with a fabulous view (that the house next door may not have because it's blocked by trees).  These are factors that only a human being with local expertise can work in to the house value equation. In fact Zillow's self-reported level of accuracy in the Northern New Jersey Market is a median error of about 12 %.

In other words, half the houses sell for within 12% of its Zestimate.  And the other half do not.

Only 25% of homes sold for within 5% of the Zillow estimate.  That means you can count on Zillow to be really accurate only about a quarter of the time!

When Zillow is wrong, it can be really wrong. Take this house in Glen Ridge which recently sold for 380,000.  Zillow's estimate was 573,000.  Can you imagine the agent trying to convince the seller that despite what Zillow says the house is actually worth almost 200,000 less?  Here's what Zillow didn't know about this house.  It needed extensive repair and was owned by a bank that wanted to get rid of it as fast as possible.

The take away is that no computer can substitute for a careful assessment by a qualified human.  While Zillow may work well for communities that have a very homogeneous stock of houses (think Levittown), it does not work as well for towns like Montclair and Glen Ridge where a two million dollar home is often a block or two away from a four hundred thousand dollar home.

On the bright side--isn't it good to know that human experience and judgment still beat out the computer?

Living on the grid - not the cul-de-sac

When I walk to Watchung Plaza from my Montclair home, I take a short route  through an interconnected grid of streets and through a small park.  I wave to my neighbor on the way.  I stop for a brief minute in the park to chat with a friend who's on her way home from work (she's just gotten off the 5:31 train from Manhattan).  It's social.  It's interactive.  It's exercise.  It's green.

On the other hand, it's very difficult to walk to the train station, or the corner store to get milk in a town that is laid out in a branching street pattern with a series of dead-ends -aka cul-de-sacs- feeding in to a main artery. In these configurations, you can be a stone's throw from your destination, but have to travel a mile to get there.  This may be a satisfactory layout for the car but not for the pedestrian or bike rider.

Watch this very clever video from the Congress for New Urbanism and you'll see what I mean...

httpv://www.youtube.com/watch?v=VGJt_YXIoJI

Should I use an real estate agent for a rental? Check out this Maplewood scam...

As you may or may not know, rental transactions are a marginal business for real estate agents.  They require many hours, uncertain payoff and a very small commission.  However, many agents handle rentals with the knowledge that renters often become buyers at a later date and therefore view it as an investment in a relationship rather than a source of revenue.

It is typical in rental transactions for the tenant to pay the commission or fee (although occasionally, the landlord will pay if the there is much competition or if the property is difficult to rent).  Many prospective tenants look for ways to avoid  the fee - who doesn't want to save a buck, right?  My approach has always been to tell my rental  clients about the many ways to rent without paying a commission.  I figure that my good advice is as valuable to the relationship as anything else.  Here are my strategies for the D-I-Y renter:

  • Knock on the door of the superintendent  in large rental buildings.
  • Call the management company of rental buildings, usually listed in the lobby.
  • Drive around looking for "For Rent" signs put out by the owner or manager.
  • Craigslist.org

If you have more time than money, these strategies may work well for you.  One caveat for craigslist : Be certain that you are dealing with the owner/landlord or a bonafide agent for the landlord.  In this recent craigslist post, a person posing as the owner of a Maplewood NJ house has advertised it for rent (at a below market-rate price).  The house is not, in fact for rentbut it is for sale.

"Hello      I can see you are interested in the ad I have pasted, I am currently in West Africa where I work as a volunteer with the RAFIKI FOUNDATION,here is the site for more detail about why I am here in Africa.( http://www.rafiki-foundation.org/). So I need a tenant to take care of it but since  I am out of the state now, I have received some proposals regarding the rent because it is located in a very good area of Maplewood, but I still have to make sure it is rented out to someone who can take good care of it. It includes facilities such as water and heat laundry facilities,  air condition, internet and telephone access and a car park and other necessary facilities, also comes with trash collection,pets are allowed as well as long as they are not destructive. so if you know you are capable of the task, get back to me so that I can provide you with some questions that I would want you to answer.below is the location.  101 Parker Ave, Maplewood, NJ."

Sounds vaguely like the Nigerian prince scam.  Renter beware.

Comments

  1. Austin on

    I just got the exact, word for word, response for a rental in Florida. I was looking to see if it was a scam. It is clear that it is now. Stay away. I certainly will. What was incredible for me was that the house actually existed. You can visit the "supposed" rental and it DOES have a sign in the yard. They must prey on renter's and rentee's
    • D. DeMattia on

      I just got the email from Robert Mock (supposedly), telling me to send $1400 to him in west Africa where he is volunteering for the Rafiki Foundation. I suspected the ad was odd, so I went looking. The exact same wording was used for a home here in Leesburg, the for sale sign out front. They are using a home that is for sale, and use the name of the owner too. Thank you for having this on the web...
      • RENT a CAR on

        Thanks for every other excellent article. Where else may just anyone get that kind of information in such a perfect method of writing? I've a presentation subsequent week, and I'm on the search for such information.

        Maplewood NJ Rocks for kids and families: Free outdoor performances

        South Orange Performing Arts Center

        South Orange Performing Arts Center

         For those of us who opted for the staycation this year, ArtsMaplewood and SOPAC offer a welcome distraction:  Free Outdoor Performances for Kids & Families  Kids: bring your parents to this event, grab your red-checkered picnic blanket, but leave the basket at home. Whole Foods will be on site selling delicious meals for the family.

        Wednesdays in South Orange (Cameron Field in Meadowland Park) Thursdays in Maplewood (Memorial Park)

        Two Performances Each Day at 5 & 6:30pm

        Wed, Aug 19 & Thu, Aug 20 Little Red Rosie and the Three Big Pigs  (I am proud to mention that friend and colleague, Nancy Chu -who moonlights in the theater-wrote and directed this performance)

        Wed, Aug 26 & Thu, Aug 27 Brady Rymer and the Little Band That Could

        A bright spot in Nutley NJ real estate

         

         

        Days-on-market for Nutley, NJ 07011 2009

        Days-on-market for Nutley, NJ 070110 2009

        One of the metrics that buyers use to judge a property is days-on-market (DOM).  Days-on-market is important because it describes how long a property has been for sale without an accepted offer.  After months of increases, many market areas in Essex County have seen DOM leveling off - a good sign for sure, but Nutley has seen  a distinct drop in DOM.  Since April of this year DOM has decreased from a high of 235 to about 180 - a drop of 55 days in the last 4 months - almost 25%.   Notice also that the decline has been consistent and steady for the last 4 months.

         

         

        Is this alone evidence of a market turnaround for 07110?  No but its' a positive sign and  the first step.  This is how the chain of events will happen: First DOM will decrease, which will cause inventory to fall (if homes sell faster, then fewer will be on the market at any given time).  Then with supply decreasing and demand increasing prices will begin to rise again.  Demand is increasing because interest rates remain low and prices have dropped making houses in Nutley affordable once again.

        Where's my NJ Homestead Rebate?

        Homestead rebateLast week I received my 2008 Homestead Rebate Application.  While I dutifully filled out the worksheet, I remembered my rebate from last year as being very minor, but better than nothing.  Lot and block number? Check.  Filing status number? Check. NJ Homeowner as of Oct 1, 2008? Check.  Only upon reading the fine print did I realize that I am no longer eligible.  As it turns out, one of the casualties of NJ's 29 Billion dollar budget is the homestead rebate check for New Jersey homeowners making more than $75,000/year.  NJ residents who are elderly or disabled have a household income threshold of $150,000.

        The deadline for filing an application for the 2008 NJ Homestead rebate is September 1 of 2009.  Worksheet packets were mailed to non-senior and non-disabled residents during the last week of July. If you did not receive your application call the Homestead Rebate Hotline at 1-888-238-1233 or on the web at www.state.nj.us/treasury/taxation.

        "The Homestead Rebate program provides rebates for homeowners and tenants who occupied their principal residence in New Jersey on Oct 1st, paid property taxes on that dwelling either directly or through rent, and whose gross income for the entire year does not exceed certain limits"

        Montclair on foot - Montclair on bike:Don't try this in just any suburb.

        Sunday morning  historical walk/run and bike tour.

        Don't try this in just any suburb.  It takes a village, a real one, to make these sorts of walk/bike tours possible.  Streets that are interconnected on a grid, sidewalks, trees to shade the sidewalks, history , a reason, a community, merchants that are involved with their community and people to participate.  One of the many reasons I love Montclair.

        Crane House Montclair

        August 9th, 11 a.m.  -a 5K walking/running tour of several historical sites. Sponsored by the Montclair Historical Society, Fleet Feet and Destination Montclair.

        August 16th, 11 a.m. - a 4 mile bike tour including historical George Washington Boulder, Charles Shultz House, Clark House Van Vleck House & Gardens. Bike rentals available from Diamond Cycle, where the route begins.

        Top 10 Walkable Places in Montclair

        1. The train station (any one of the six)

        2.Watchung Plaza for a dozen bagels on Sunday morning

        3.The farmer's market on a Saturday in June for local rhubarb and asparagus

        4.Tierney's Tavern on the way home from work for a retro burger and beer (no phone, no credit cards!)

        5.The Wellmont Theater on a Saturday night to see David Byrne, Kathy Griffith or Rosie O'Donnell

        6.Tinga Tacqueria on Monday and Tuesday nights when kids eat for $2

        7.The "all children" playground in Edgemont Park on a weekday afternoon in spring

        8.Anderson Park on the way to work for early morning Tai Chi

        9.American Royal Hardware (aka Mr. Charlie's) for that whatchamadoohickey that you'll never find at Home Depot

        10. Van Vleck House and Garden for a leafy respite

        Welcome to Walkable Suburb: Living in the Best NJ Towns

        For years, New Jersey was sprawling westward, northward, and southward with real estate development in formerly rural areas. Now the recession has hit and so many of those big new shiny houses a couple of hours outside the city are losing value rapidly--despite their newness, their immense pasture-like lawns, and quiet isolation. What seemed like a good idea a few years ago is suddenly languishing in the for-sale market.

         

         

        That's why now seems like a good time to start talking about why density is good for the planet and good for humans. Yes, density. The word has a bit of a negative connotation. But you'll get past that. These days, many young families want to live in areas where they can walk places, shop in their towns, spend less time in cars and get to the city quick.  Density is also a good investment.  In the recent economic downturn, towns on train lines have been holding real estate values far better than those far from urban centers.

         

         

        Walkable Suburb is my new website and blog.  And it's the focus of my New Jersey real estate business. You can find out more about density, new urbanism and what makes New Jersey's inner-ring suburbs like Montclair, Glen Ridge, Bloomfield, South Orange and Maplewood, walkable suburbs.  These towns were built early in the last century with walking, community, and public transportation in mind. They are increasingly desirable and make sense for the world today.

         

         

        Welcome to Walkable Suburb. Please drop in from time to time or sign up for my monthly summaries via email or my RSS feed. I hope to keep the journey interesting with insights, market analysis, and tips for life and real estate in New Jersey's best walkable suburbs.