Perplexed by my property value relative to comps. What is going on?

11 Replies

Let me preface this by saying that I realize zillow zestimates aren't exactly the most accurate valuations metrics, but my issues are still puzzling.

I am located in Houston, and 2014 appraisals recently were released. Due to our strong economy and the booming energy business, a lot of people's home values have risen 20% percent or more, and I believe the average for the city was 17% this year. For instance, my assessed value for property tax purposes went from $229,000 to $273,000. Currently, my residence is a 3/2.5 condo in an 18 unit complex. So now to the questions...

1) I am seeing an odd disconnect on Zillow. My unit is the nicest unit in the complex, yet my property value has not gone up a penny according to Zillow. In fact, it has actually gone down about $1,000. When comparing other units in my complex, a lot of their zestimate values have gone up anywhere from 2%-4% the past month. I don't understand why this is happening. Not only is my unit the largest one in the complex, but it has the nicest view of downtown, and it is the ONLY unit in the complex with actual bedrooms. Since the condo complex is a loft layout, all of the other units have bedrooms without doors or a 4th wall.

2) I am failing to understand why my property value is so low on zillow with a HUGE disconnect compared to the county's appraised value, and this question ties partly into the issue pointed out above in issue #1. I'm looking at my county's property tax records, and there are 1/1.5 layouts with 1500 square feet appraising at $209,000. My unit is 2,060 square feet with a 3/2.5 layout and I actually have walled bedrooms and it is appraising for $273,000.

When comparing this to Zillow's zestimate, the $209,000 piece of property has a zestimate of around $250,000 while mine has a zestimate of $263,000. To me, this is rather odd.

3) Lastly, I had a question about the actual appraisal metrics used by the county. According to county records, my unit is a 2/2.5 but I clearly have three bedrooms in my unit. Why does the county believe my unit is a 2/2.5, how would I go about changing it, and would it be worth changing?

I would stop worrying about what Zillow thinks of your apartment, I'm sure it is appreciating just as much as apartments in buildings nearby.

If the county has underestimated the value of your apartment becasue they think it is a 2 bedroom I certainly would not do anything to correct it. When they overestimate then people try to get it lowered.

Originally posted by @Brant Richardson :
I would stop worrying about what Zillow thinks of your apartment, I'm sure it is appreciating just as much as apartments in buildings nearby.
If the county has underestimated the value of your apartment becasue they think it is a 2 bedroom I certainly would not do anything to correct it. When they overestimate then people try to get it lowered.

Brant,

While I agree with you, I have one other concern. This unit I am living in will be a rental in the future, and I know a lot of people use zillow as a reference point when it comes to monthly rent. Since the estimated rent is lower than what it should be, wouldn't people use that as an anchor? Psychologically, it's going to weigh heavily.

Retrospectively, what would I do if I ever chose to sell the condo? If zillow estimates the property at $263,000 realist comps value the property at let says....$300,000, I feel like that was detract a lot of potential buyers from even viewing or bidding on the property.

It could be a little bit of a problem with renting or selling with certain people. When somebody who has been looking for a 3/2.5 to buy or rent for a while they will get an idea of what things are worth and judge for them self whether it is a good deal or listen to their realtor. If I was looking for a place to rent I would be comparing your place to the rent of my other options in the area, not Zrent.

I'm purely speculating here, since I don't know your area, neighborhood, or complex, but it may be related to the fact that you have "the nicest unit in the complex" and your unit is "the largest one in the complex, ... has the nicest view of downtown, and it is the ONLY unit in the complex with actual bedrooms." When you own the nicest place, your lower-valued neighbors drag down your value. This is part of the reason some people don't buy "the nicest house on the street" - they know the neighbors' home values are dragging them down. Basically, if you are the one odd-ball in an area, your value will be affected by the values in the area. This happens the other way too - one crummy house in an otherwise fantastic neighborhood will have a higher value than it really should.

I don't generally put a lot of stock in zillow's zestimates, though.

Regarding the county listing your place as a 2/2.5, was one bedroom added without a permit? Perhaps before you bought it? If so, this may become a much bigger issue (read: problem) for you. You may have to try to get it permitted after the fact, or they may require you to tear it out if it wasn't built properly. If, however, it is a legal 3 bedroom, then getting the county to recognize that might affect your assessed value (read: cause your property taxes to go up), but may also cause your estimated market value to go up as well.

Justin, I wouldn't sweat the Zillow estimates too much. Put stock in actual sale data and not their Z-estimates. A house/condo is only worth what someone pays for it at a point in time.

I've had similar experiences with Zillow. In late-2011, my house was appraised at $495K. Since then, the housing market has strengthened and we finished our basement. Yet, Zillow says my place is worth ~$400K.

I think Zillow is a great tool for some very cursory analysis, but it's only a starting point and really falls short with its estimates IMHO. I'm also guessing you know your local market better than Zillow. Good luck to you.

@Justin Moon I know this will sound like I'm promoting myself, but the best thing you can do is get a Realtor to do a CMA and forget about Zillow, Redfin, Trulia and all those free estimates, or at least use them to have a very broad and general idea. The truth is, the MLS is king when it comes to pricing for residential properties, and hence the reason I got licensed.

^^^^ What he said. I'm here in Houston as well and I'm always checking values on properties where the seller/wholesaler is using Zillow as their basis. I pull comps and it's not even close. When people give me Zillow zestimates I just roll my eyes. Call zillow and get them to make an offer.

If you have a CMA, just show it to any prospective tenant/buyer who comes in with some lame zillow print out. If they insist on their "zestimate", kindly say thanks for stopping by and move on.

As for your 2/3 BR issue with Harris county, dude, don't stir that pot. If they think it's a 3 BR, the assessment is going to go up considerably and hence your taxes as well. It sounds like you want to pay more taxes, which as a resident of Harris county, I appreciate, but I don't think I'd be all over that. I just got my assessment and protesting to get it lowered.

Zillow values are all over the board. I have a property that I paid $11,000 for did NO WORK and Zillow says its worth $250,000, not even close to the real value!

It an estimate, its a math formula, they have never seen your condo, never will and they are guessing at the value.

If you want to tell the assessment office that you're really a 3 br go ahead, but don't complain then when they increase your assessment and your taxes. If you do that the Zillow value might do up. Then again it might not.

As that real estate investor Dirty Harry always says, "Do you feel lucky, well do you?"

"Not only is my unit the largest one in the complex, but it has the nicest view of downtown, and it is the ONLY unit in the complex with actual bedrooms. Since the condo complex is a loft layout, all of the other units have bedrooms without doors or a 4th wall."

Ok, you don't really think Zillow pops into your house before they do their estimates to check out your view and see how many walls you have, do you?? <snarky, yes, sorry couldn't help it>

Seriously, Zillow has never been accurate and never will be. As @Dennis Rodriguez says, get a realtor to comp your place if you are really worried about it. Also, and maybe Dennis can answer this, since Texas is a non-disclosure state, Zillow doesn't even know what actual closed sales prices are, do they? If not, that makes them even more useless.

In regards to the 2 or 3 bedroom issue, this is definitely a permitting issue. What did the tax records say when you bought the place? If you ever go to sell, that would be the time to go work that out, since you won't be able to include the full value of a 3 bedroom if it's not actually permitted as such. Before then, enjoy the tax discount.

@Justin Moon Welcome to BP! Forget Zillow, it has no value in setting prices. I have a house that appraises out for $1.3 million, if I look on zillow the zestimate is in the 600's. The only way to get a true value is to base your price on actual SALES of properties in the neighborhood.

The difficulty with sites like Zillow in Texas is that we are a non-disclosure state meaning the real estate sales prices do not have to be disclosed which if someone does not have MLS access it can be very difficult to ascertain value. If you believe the valuation by the appraisal district is to high file a protest and contact a Realtor to get some accurate comps of recent sales. The appraisal district value is rarely a true indication of value

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