Zillow vs Appraiser Part IV

Zillow vs The Coyle Group, Part IV

It’s been a pretty busy 2015 and I really haven’t had much time to blog. However, this is probably my favorite post to write each year. Since 2011, we’ve had a little contest between Zillow and The Coyle Group (see prior years). We randomly select a number of appraisals recently completed by our office and see how our appraisal values match up against Zillow’s Zestimates. This year we chose 16 properties across Philadelphia, Montgomery County, Bucks County, Delaware County and Chester County. Housing styles ranged from Roxborough rows to Center City condos flats to Main Line mansions.

Below is a chart of the results. The first column shows where the property is located, the second The Coyle Group’s appraised value and the third Zillow’s Zestimate. The last column shows how high or low Zillow was relative to our appraised values.

The Coyle Group - Zillow 2015

Once again, the results are pretty astonishing. Now, Zillow was pretty accurate on the Ambler Golf Community home; and the Merion Station Tudor was right on target. I’ll even concede that the Center City Condo was in range as well.  But when Zillow is off, it tends to be way off! For instance, with the Parkwood Row in Northeast Philly, Zillow understated the value by 34.62%. That’s a big miss considering how “data rich” the Northeast is. Also, it just so happens that this property is currently active for $190,000.  Zillow missed that little fact.  This is where having a human being analyze the market data is so important.

Another interesting example is the Wyndmoor Colonial. This property was over valued by more than 22%.  You see, what Zillow didn’t know was that this property was in original condition.  Original kitchen, baths, fixtures, shag carpeting, wallpaper, etc.  It was like stepping back into the 1960’s.  Again, this is where having a certified appraiser physically inspect the property really matters. Algorithms don’t differentiate between “Brady Bunch chic” and a knocked-out kitchen with granite and high-end stainless appliances.

It just so happened that only four of the sample properties were under stated by Zillow.   Granted, is a very small sample but, on average the Zestimates were under the appraised value by 22.98%. This is important to consider. If you are a homeowner selling your property and relied on a Zestimate to price your home, you could potentially under-price your house and leave some serious money on the table.

The other twelve value samples are all over-stated by an average of 8.83%. As a seller, if you over price your home in a competitive market, buyers will pass you by in favor of more competitively priced homes. Eventually, you’ll probably have to lower your price and run the risk of losing buyers that may have otherwise been very interested in your home.

Philadelphia and the surrounding markets are so nuanced that computers and algorithms can’t accurately take into account all of the individual market factors. For instance, things like specific location can’t be accounted for by Zillow. If your home is next to a garbage dump Zillow will look at it the same as if it were next to a park. As pointed out above, Zillow also has trouble factoring condition and updates into their Zestimates, as well. As of right now, there is no technology that beats having a knowledgeable appraiser to determine an accurate value on a property. Granted, the technology is getting better, quickly but it’s still not as reliable.

Don’t get me wrong, Zillow has it’s place. It’s great for gathering information on neighborhoods and general market trends. It’s comparative tools and graphs are very useful.  Zillow is a good place to start.  However, in the end, Zillow’s Zestimates are not appraisals at all and should not be relied on as such. If you need assistance in pricing a property, I suggest getting some input from a from a good local agent or a certified appraiser and passing on Zillow.
The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing. If you need a guest speaker at your next sales meeting, please give us a call. We would welcome to opportunity to speak to your group and field any appraisal related questions you may have. For more information please visit our website at www.TheCoyleGroupLLC.com You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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Zillow vs The Coyle Group Part III

The Coyle Group vs Zillow Part III

It’s that time again for the annual match up between Zillow and The Coyle Group.  This year we randomly selected 25 appraisals completed by our office with in the past 3 months.  The appraisals were of properties across Philadelphia, Montgomery County, Bucks County, Delaware County and Chester County.  Housing styles ranged from simple South Philly row homes to Center City condos (you’re welcome Mark) to Main Line mansions.

Below is a chart of the results.  The first column shows where the property is located, the second The Coyle Group’s appraised value and the third Zillow’s Zestimate.  The last column shows how high or low Zillow was relative to our appraised values.

Property

 Appraisal

 

 Zillow Zestimate

Difference

Rittenhouse Square Townhse  $    990,000.00    $     954,000.00

3.63%

Chestnut Hill Twin  $    285,000.00    $     329,000.00

15.43%

Ambler Colonial  $    570,000.00    $     396,000.00

54.47%

Burholme Twin  $    125,000.00    $     138,000.00

10.40%

Media Split Level  $    325,000.00    $     251,000.00

29.48%

Mount Airy Twin  $    310,000.00    $     259,000.00

9.69%

Northeast Philly Row  $    171,000.00    $     172,000.00

0.58%

Hatboro Split Level  $    225,000.00    $     244,000.00

8.44%

Gladwyne Colonial  $    600,000.00    $     758,000.00

26.33%

Society Hill Townhouse 1  $    875,000.00    $     848,000.00

3.18%

Conshohocken Single  $    190,000.00    $     252,000.00

32.63%

Flourtown Colonial  $    735,000.00    $     698,000.00

5.30%

West Chester Colonial  $  1,300,000.00    $  1,000,000.00

30.00%

Society Hill Townhouse 2  $  2,100,000.00    $     922,000.00

127.76%

Chestnut Hill Colonial  $    975,000.00    $     857,000.00

13.77%

Bryn Mawr Colonial  $    770,000.00    $     750,000.00

2.67%

Havertown Cape Cod  $    295,000.00    $     286,000.00

3.14%

South Philly Row  $    186,000.00    $     151,000.00

23.17%

Doylestown Colonial  $    395,000.00    $     337,000.00

17.21%

Villanova Tudor  $  1,550,000.00    $  1,430,000.00

8.39%

Roxborough Row  $    240,000.00    $     210,000.00

14.20%

Warrington Colonial  $    435,000.00    $     378,000.00

13.10%

Condo – The Philadelphian  $    675,000.00    $     634,000.00

6.07%

Condo – Queen Village  $    180,000.00    $     183,000.00

1.63%

Lafayette Hill Colonial  $    325,000.00    $     275,000.00

15.38%

 

The results are pretty amazing.  In a few comparisons, Zillow was right on target.  For instance, I would say that they were spot-on with the Northeast Philly Row and the Queen Village Condo.  They were fairly close with number of others including the Rittenhouse Square Townhouse, Society Hill Townhouse 1, the Bryn Mawr Colonial and Havertown Cape.

However, Zillow completely whiffed on a number of others, most notably the Society Hill Townhouse 2.  Zillow wasn’t even close.  The Zestimate missed the mark by more than 127%.  That’s crazy considering there was a recorded sale of this property in 2013 for $1.85M.  This is where having a human being analyze the market data is so crucial.  All the fancy algorithms and computer models overlooked the simple fact that this property sold only months ago for twice the Zestimate amount.  We appraised the property a couple months after the sale and following a renovation of the kitchen and baths.

On average, including the Society Hill 2 property, the Zillow Zestimate was 23.42% lower than the appraised value.  Excluding the Society Hill 2 property, Zillow was still off by 16.47%.  When Zillow over-Zestimated they did so by 11.25%, on average.  These are some significant numbers.  If you were selling and used a Zestimate to potentially under-price your house, you could be leaving huge sums of money on the table.  If you overpriced, the market would likely pass you by in favor of more competitively priced homes.  Eventually, you would have to reduce your price and by that time many of the interested buyers will have moved on.

Philadelphia and the surrounding counties are such a patchwork of real estate markets that computers and algorithms can’t possibly take into account the individual nuances.  Zillow doesn’t take into consideration if there’s a vacant house next to your property or a golf course.  Zillow looks at them as being the same. That’s why having a knowledgeable appraiser to physically inspect the property is so important to realizing a correct value.  Nothing (so far) beats having a live human being appraising your property.

Bottom line, Zillow is not all bad.  It is not an appraisal but it is a good place to start.  The neighborhood data, general sales information, graphs and comparative tools are great and very user-friendly.  However, if you are looking to properly price your home, I would pass Zillow by and get some advice from a good local agent or a certified appraiser.

The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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Mount Airy Trends

Being located in Erdenheim, just outside the city limits, we are frequently asked to appraise properties in northwestern Philadelphia, especially Chestnut Hill, Mount Airy, Roxborough and Manayunk. 

The other day we received our first question for the Ask PAB! section of the site.  It was submitted by a local agent who works primarily in the northwest section of Philly.  She typically deals with entry level and first time buyers.  For that segment of the market, Mount Airy offers a great selection of housing options for her clientele, in a wide range of price points and design styles.   It has very appealing housing stock, access to transportation, shopping, proximity to Center City and the suburbs and very unique community atmosphere.  Her question was simply:

 “How have Mt. Airy twins and rows been performing over the past couple of years?”

Below is a chart of the sales of 3-4 bedroom twins and rowhomes in Mt. Airy from January 2008 through December 2010.  Click on the chart to enlarge.

The blue dots indicate the sales of 3 bedroom homes; the red dots represent the 4 bedroom sales.  Our sample produced 341 sales of 3 bedrooms and 105 sales of 4 Bedroom homes, in Mt. Airy, during that time period.  The green and yellow lines depict the linear sale price trends for 3 and 4 bedroom houses, respectively.

The trend lines indicate that both 3 and 4 bedroom homes are moving downward.  However, it appears as though the 4 bedroom properties are experiencing a deeper shift that the 3 bedrooms, which are riding a flatter trend.  This is likely due to the fact that there are fewer 4 bedrooms homes and, as a result, fewer 4 bedroom sales.  With a smaller sample, it is easier for a few sales to influence the trend.  Conversely, with a greater number of samples it is less likely that a handful of sales to move the trend so dramatically.

If you have a question about real estate markets and trends in the Philadelphia region, please visit our Ask PAB! page to submit your inquiry.

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The Roxborough Row

 

Philadelphia is known as a city of neighborhoods. When Philadelphians meet one another for the first time it’s not long before someone asks “what neighborhood are you from?”

Neighborhoods can be as small as a few square blocks or cover large sections of the city. One such neighborhood is the Roxborough section of Philadelphia. It occupies much of the northwestern portion of the City abutting Montgomery County, along with Manayunk and Chestnut Hill. It has always been a solid, working class area with strong family values and sensibilities.

The staple of the Roxborough housing stock is the three bedroom, single family attached rowhome or townhouse. Many were built to satisfy the housing needs of the local factory workers and to keep up with urban sprawl. Depending on which part of the Boro you are talking about the homes were generally built between 1865 and 1970. These are still very popular housing choices for first time homeowners and investors.

Below is a chart of the sales activity of the typical 3 bedroom Roxborough Row over the the past four quarters (2009 Q4 – 2010 Q3). As you can see, the number of sales spiked to 36 in 2010 Q2. This is a direct result of the tax credit that was being offered to first time homebuyers. The three bedroom Roxborough Row was essentially made for this program due to its attractiveness to first time buyers and those targeted buy the tax credit program. You will notice that in 2010 Q3, after the sunset of the credit, sales of the Rows dropped off by more than 60%, which was just where sales were prior to the credit program.

The next chart compares the Average and Median Sale Price for three bedroom Roxborough Rows over the same time period. In 2010 Q1, the Average Price spikes up to $271,042 despite only 12 sales during that quarter. The reason for the skewed average is two or three higher sales of newer townhouses that pulled the average up. Note that the Median Sale price tracks right along with the other quarters. The Median Sale Price for Roxborough Row has hovered between $204,900 in 2009 Q4 to a high of $214,500 in 2010 Q1. In 2010 Q2, the median began to settle into a more traditional trend eventually getting back down to $205,250 in 2010Q3…almost even with where it was in 2009Q4, prior to the tax credit.

It goes to show, that despite government interference with credits and incentives, the markets will correct themselves. It also goes to show that the Roxborough Row is the backbone of this market and can withstand outside market influences. Perhaps that’s why it’s been around for so long and continues to show consistent and measurable value.

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