Ask Brian Real Estate: Which is better Zillow or Fair Market Analysis?



Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries email your questions to askbrian@realtybiznews.com.

Q1. James from Oklahoma City OK asks. Brian, we are looking to sell our home in Oklahoma City and move to Kansas in the spring of 2019 to be closer to our parents, I was researching our home value on Zillow and it appraises for 210k which seems to be quite a bit. We are looking at hiring an appraiser to get a more accurate sell value. What are your thoughts?

A1. Hello James. Zillow is a good starting point but lacks human intelligence and the ability to make quality judgements because it works off an algorithm based on limited data. This is a big reason Zillow puts a disclaimer on the information. In Zillow’s own words, “It is a starting point in determining a home’s value and is not an official appraisal.” Zillow strongly suggests carefully looking at the value range as an indication of how accurate the “Zestimate” is. A wide spread between the high and low values is an indication that less data and/or volatile data was used to make the calculation. Although a good starting point, Zillow believes the range has only a 70 percent confidence interval.

An appraisal is an option but that will cost you several hundred dollars and will have to be repeated at additional cost when your home actually sells. Any lender will insist on a new appraisal. Your best option before actively marketing your home is to have a few local real estate brokers provide a Fair Market Analysis. You should be able to have these done at no cost to you. Obtaining three is considered the norm. These become the value range with a high, middle, and low professional estimate. Each broker will be looking for you to list the house with him/her but you should not be obligated to do so. Besides obtaining three well thought out value analysis, you can expect the brokers to offer marketing suggestions. These often include a few suggestions about improvements you can make to obtain the highest price and to increase the homes appeal to buyers.

Q2. Linda from Southern California. Brian, about three months ago I inherited my father’s home in a Houston, TX suburb. It’s starting to rack up expenses that I really don’t want to pay. I don’t have a personal use for the house. Do you have a suggestion what I should do with it?

A2. Hi Linda. That is a situation that many readers face and more will as our population ages. I’m assuming your father is no longer living in the home, it is sitting vacant, and the title is in your name. Although the accumulating expenses are a financial burden to you now, you have several opportunities. Knowing where to start is probably difficult. You’ve already started by realizing you don’t have a personal use for the house and probably plan to remain in California.

I suggest you do a little more self-assessment. Are you financially able to meet the expenses, at least for the short term? And what condition is the house currently in? Keeping the taxes paid and meeting other expenses keeps more doors open for you. Specifically, it keeps the retail sale or rental opportunities available. The Houston area real estate market is running on all cylinders but retail buyers shy away from houses that have tax liens or are in poor repair. People in Houston are particularly wary about houses damaged by Hurricane Harvey a year ago. Otherwise, home sales are at all-time highs and prices are strong but there is competition. Houses selling the best are those valued slightly below $200,000. At this price, there is a pretty even mix of sellers that discount the price if it doesn’t sell quickly and others are holding out for the full price. If you are considering selling, I suggest you research several brokers close to the neighborhood the house is located in. You’re going to want at least three Fair Market Analysis’s conducted. You may want to try getting broker recommendations from your father’s friends, neighbors, and online reviews. Houston has a strong employment market. This includes people relocating to engineering, science, and professional jobs in the gas and oil industry. You may want to include a broker specializing in relocation services.

Of course, you have several other options. Houston also has a strong rental market. Since you live in CA, you almost certainly will want to go with a property manager. This takes some up front work on your part to thoroughly research suitable property managers. Location is everything in real estate so don’t pick one too far from where the house is. Also, the brokers that perform the market analysis could be property managers also or be able to refer you to a few. Still, you should do independent research. Another option is wholesaling to an investor. You probably only want to consider this if the house needs repairs beyond what you can afford and manage from a distance. In Houston, this is probably your least preferred option because investors have a large inventory to select from as a result of Hurricane Harvey. I hope this helps and best of luck to you with the multiple opportunities you have available.

Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to askbrian@realtybiznews.com.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.