Q: For real estate pros (agents, appraisers, etc.) re. Trulia/Zillow/etc.

[The Heretic]

I think it is just heating up now.

I remember 2007; I had people back then telling me for years I should buy because real estate only ever appreciated, but I held off because I had read about the bubble and I kept telling people it would deflate eventually. I also really wanted to move back here.

After a number of years of no deflation, I had just given up and I was shopping for a house in the Seattle area (outside it). Within a couple of months I had been laid off and the bubble burst - that was 2007.

I went through a few jobs and then by chance wound up back here, and then on a whim I started looking at property and bought this place.

We'll see what happens, but if the market bombs again I will just wait it out. I am thinking of working longer anyway because my daughter could use the extra money I would earn and putting off retirement would mean I would have more SSI. I can afford to buy land right now if I wanted to, but I am not in a hurry. I keep my eyes open for land though - but it has to be the kind of land and location I want.

 

[jsparks747]

My parents used Zillow to do research and to find houses, then realtor's contact info from their company and work from there. Never had to sell a house though. Their problem is that they own a 2,300 sq foot house on a low traffic street with a fence and gate giving them direct access to a park. I know what you mean about the market blowing up though. They bought their house 17 years ago for about $325,000. They had an appraiser take a look at it last year since Jake has only 3 years of HS left and then college so my dad can retire and he put the value anywhere from $600,000 - $750,000. Inflated like Hillary Clinton's ego.

 

[Gaucho Gringo]

My parents used Zillow to do research and to find houses, then realtor's contact info from their company and work from there. Never had to sell a house though. Their problem is that they own a 2,300 sq foot house on a low traffic street with a fence and gate giving them direct access to a park. I know what you mean about the market blowing up though. They bought their house 17 years ago for about $325,000. They had an appraiser take a look at it last year since Jake has only 3 years of HS left and then college so my dad can retire and he put the value anywhere from $600,000 - $750,000. Inflated like Hillary Clinton's ego.

Unfortunately you can go to half that value in a couple of months if everything tanks which it will again, we just don't know when. Has happened at least 5 times in my lifetime, I am very conservative and don't go for all the hype after getting burned in the stock market at age 14, 52 years ago. My $149.00 investment(at $.35-40 an hour) recommended to me by my dad(great father and provider- great in public finance but not too good as stock market advisor) took 20 years to reach that again(at 1\3rd less monetary value) at which point I sold it. I suppose I should be thankful I didn't loose my entire investment. Probably the reason I did not take that money and invest in Microsoft, Apple. Intel or any of the other companies people were telling me to invest in. My money comes to me at too dear a price to waste it, unlike the majority of the people in the world today. My father was the business manager for a Portland area school district. one of the first things he did was instead of the school taxes sitting in the county treasury drawing no interest he put it in interest bearing accounts in banks. Pretty soon every bank in the Portland area was trying to get him to deposit the districts money in their banks. Somehow some members of the school board were upset about this for some reason(probably why change the way things have been done for the last 40-50 years). My father offered to work for free, just taking the interest on the money deposited with the banks. The school board was fallng head over heels to get an employee for nothing until one member got nosy and found out that my father would be getting over 5 times his salary under that arrangement. So much for that, the school board did not question my father after that during the 18 years he worked past that untill his untimely death in 1979.

 

[The Heretic]

Going from $325K to double that in 17 years may seem like a huge inflation, but it isn't - that is just 4% per year appreciation.

If a person buys a $325K house with zero percent down, pays 1% property tax, and pays it off in 20 years, they have paid $537K for that house.

What is a bit crazy is when I "paid" (not paid off yet) $350K for my property, 5 years ago, and now Zillow is saying it has appreciated $200K in those 5 years? I don't think so. That is $40K appreciation per year.

Maybe if it was a conventional (not manufactured) home in suburban Beaverton of the greater metro area, but not a manufactured home sitting on 20 acres almost 30 miles away from downtown Portland.

So far, I have paid an average of about $28K+ per year in interest, insurance, taxes and improvements, not including principal so I would be happy if the value was truly appreciating by $40K per year, because that would mean that even with interest and taxes, I would be making a profit, plus living here for free.

But I will be happy if I can break even when taking into account interest, taxes and insurance - i.e., when I sell, get back every penny of cost for the property, because I would still be living here for free, if you don't include the labor I have put into the property or the interest I could make on the money I put into the property.

 

[jsparks747]

Unfortunately you can go to half that value in a couple of months if everything tanks which it will again, we just don't know when. Has happened at least 5 times in my lifetime, I am very conservative and don't go for all the hype after getting burned in the stock market at age 14, 52 years ago. My $149.00 investment(at $.35-40 an hour) recommended to me by my dad(great father and provider- great in public finance but not too good as stock market advisor) took 20 years to reach that again(at 1\3rd less monetary value) at which point I sold it. I suppose I should be thankful I didn't loose my entire investment. Probably the reason I did not take that money and invest in Microsoft, Apple. Intel or any of the other companies people were telling me to invest in. My money comes to me at too dear a price to waste it, unlike the majority of the people in the world today. My father was the business manager for a Portland area school district. one of the first things he dis was instead of the school taxes sitting in the county treasury drawing no interest he put it in interest bearing accounts in banks. Pretty soon every bank in the Portland area was trying to get him to deposit the districts money in their banks. Somehow some members of the school board were upset about this for some reason(probably why change the way things have been done for the last 40-50 years). My father offered to work for free, just taking the interest on the money deposited with the banks. The school board was fallng head over heels to get an employee for nothing until one member got nosy and found out that my father would be getting over 5 times his salary under that arrangement. So much for that, the school board did not question my father after that during the 18 years he worked past that untill his untimely death in 1979.

Yeah. Luckily it is a prime piece of land, double lot, up by a park, quiet street, and right in the middle of Eastmorland and the people would die for a house like theirs. All about putting it on the market at the right time.

 

[Mistman]

The real estate market is extremely fickle. When rates were just hitting the low 3's in '12 my wife and I thought maybe it was time to move in a little closer, upgrade, etc. We briefly thought about selling, looked around and what was available. In the end we decided to use the equity in our house to put a down on a new build on the property we lived on. I knew a builder who built a couple homes for friends of mine, we talked, looked into a mortgage, got approved for a great rate using the equity in our property. 14 months later when the house was finally finished we'd lost nearly $100k in equity and had to come up w/a pile of cash at closing that we weren't anticipating having to spend. Property values had 'changed' that much in a little over a year (according to the appraisers). It sucked pretty bad but here we are, we love the house and are almost over the pain of dumping so much $$ into it.

 

[The Heretic]

Just a note: my neighbor almost bought my property (long before I owned it) with the idea of building on it while living in the current home, in part because it is a much larger lot (personally I would have preferred the lot he is on). But he decided against it because he would have much more invested in it.

Point is, there are a lot of factors about a rural property than just the property values in a locale. It is one thing when the property is in an urban/suburban area and the house is on a tenth of an acre lot and there are thousands of houses around it that are similar - then you can see why some people get into a buying frenzy and bidding wars - as long as they get something it is probably suitable.

But rural properties there is a lot more to consider. How much of the property is usable for building and landscaping? How large is the plot? Has it been clearcut? Is there a view? Is there a shop and/or other outbuildings? What happens in the winter - is the ground flooded? Is there fire danger? A lot of questions/issues. Not the least of which is whether the commute is tolerable - a lot of people won't live rural because of the commute. It really cuts down on the size of the market.

Conversely, there are not a lot of rural properties for sale, so it takes some time to find one you like.

FYI - a property across the road from me was on the market for several years and had no offers. It is a nicer house but no garage or shop (room for a garage, maybe a shop). I think the owner was asking too much.

 

[Mistman]

From everything I've gathered, the home and approximately the acre it sits on carry the brunt of the value on rural property. The rest of the property can add value or have a negative effect on value, as Heretic mentioned sometimes the property has 'issues' that make it less desireable. If someone just logged off the property prior to listing there's basically no added value in the land and will require work to maintain, could represent a negative effect on value. I too have seen places languish for many months, sometimes into years on the market from people thinking they can recoup their investment. My neighbor listed 40 acres next to me a couple years ago for $350k, no road, no utilities and about 1/2 the property is a swamp in the winter. He left it listed for almost 2 years w/out a bite. It's 1/2 of an 80 acre lot, the whole 80 is probably worth under $300k, it has about 10 acres of good timber the rest is a hay field. The only redeeming quality it has is that it's an elk field but that only matters to a select few people, not enough to hang your hat on.
I started out here w/about 1/2 the property I have now. My neighbor had 20 acres w/a small house, 2 barns a loafing shed and 3 pastures fenced out. It also had about 8 acres of good timber. When he died the family tried to sell it for $199k back in '01. No one even looked at it. After about 6 months I offered $50k for it. The realtor basically laughed at me. I told him I just wanted it to add to my property but had no interest in developing it. He told me they were going to re-assess it's value and he'd let me know the new price. Came back @ $99k, I said that's fine but I'll give you $50k. I didn't hear from them for probably 4-5 months when he finally got ahold of me and told me to put an offer together. I got it for $50k. Good story about the reality of rural property. I feel like I got lucky but on the other hand anyone w/$55k could have gotten it as I was all in @ $50k, it wasn't worth any more than that to me.
I don't think you're in too bad a spot, lots of people are willing to commute 30 miles for an upgrade to their quality of life. I'm 55 miles from my garage to the parking lot where I work in Hillsboro. Quite a number of us out here commute ~50 miles one way into work. Obviously that's not for everyone, I do work ~30 percent of the time from home which helps a lot. For all the uncertainty w/rural property I'll never live anywhere else, it's a quality lifestyle unlike anything found in suburbia. I've just learned that the real estate part of the equation shouldn't be looked at as an investment though it very well can be it's just not a given.

 

[The Heretic]

There is a property up the road from me where whomever owns it had a bit of thinning done, and then put in a road to a possible home site, then they asked something like $34K per acre - twice what prime acreage goes for up here. The problem is that the road does down a steep gully and comes back up the other side. In the winter you would need at least a 4x4 with rugged chains to get in and out, possibly a tracked vehicle. I am pretty sure there is no power to the home site. But it sits there - for years - with no buyers. I don't know the owners, but my bet is there have been no offers - one look and almost anybody would just roll their eyes. I don't think they would sell it at half the price.

 

[jsparks747]

Going from $325K to double that in 17 years may seem like a huge inflation, but it isn't - that is just 4% per year appreciation.

If a person buys a $325K house with zero percent down, pays 1% property tax, and pays it off in 20 years, they have paid $537K for that house.

What is a bit crazy is when I "paid" (not paid off yet) $350K for my property, 5 years ago, and now Zillow is saying it has appreciated $200K in those 5 years? I don't think so. That is $40K appreciation per year.

Maybe if it was a conventional (not manufactured) home in suburban Beaverton of the greater metro area, but not a manufactured home sitting on 20 acres almost 30 miles away from downtown Portland.

So far, I have paid an average of about $28K+ per year in interest, insurance, taxes and improvements, not including principal so I would be happy if the value was truly appreciating by $40K per year, because that would mean that even with interest and taxes, I would be making a profit, plus living here for free.

But I will be happy if I can break even when taking into account interest, taxes and insurance - i.e., when I sell, get back every penny of cost for the property, because I would still be living here for free, if you don't include the labor I have put into the property or the interest I could make on the money I put into the property.

When they bought the house they both had good jobs and had just sold their house of 10 years that was fully paid off so they were able to pay it off in a 3 years and avoided a large chunk of the bank interest.

 

[bolus]

buying a house.
Zillow puts it $131K over the appraisal and $176k over what I am actually paying for it,
Sold my Portland house, Zillow put it $30K over what it sold for.
Zillow was also much higher than my appraisals for refinancing in the past

They seems to be moving away from estimates as well and more for shopping. Probably because they know they are off so much

 

[The Heretic]

I don't know. I am guessing they are just winging it and don't really have a clue. Each property is way to individual to model the way they do. They just go by general trends, look at a few attributes of the property, run it through their computer model and call it good.

Without going out and looking at the property they just really don't know. The house could be falling down around the owner's ears, or it could have just had an extensive/expensive remodel with a new roof, and they would not know. They don't know I have gully that separates 75% of my land from the house, they don't even know the land is forested and the timber makes up the bulk of the value of the property - they wouldn't know that the timber is standing or whether I clear cut it. They just don't know.

Their models work somewhat for urban/suburban real estate, but not rural - the properties just vary too much.

 

[CoastRange57]

People put an awful lot of stock in Zillow and they tend to be not so accurate in my opinion. I use realtor.com and redfin a lot, pretty much every day keeping track of prices on the west side of Hillsboro and over in Central Oregon, primarily the Terrebonne, Prineville areas. I look at those markets every day and that tells me what property is worth. Appraisers are as good as who they are working for, and what they "need" to appraise at.

I also do not believe that the market is going to "tank" anytime soon. The last fall in 07 was due to bad paper and there was not nearly the inflow of buyers that you have right now and there is plenty of solid data that backs that up. The market has lots of qualified buyers, with good cash downs and good credit. In fact the market has a lot of cash buyers in the under 600K market right now.

With over 30,000 people a year coming into the PDX area, the demand for housing is going to be huge. New starts will not meet that demand, so existing inventory will sell well. We are putting about 50K into our existing home to get new finishes, new HVAC, new siding and windows, upgrade the landscaping and general cleanup. OUr place will price in the high 500's for a rural house and shop, machine shed, pad and utilities for a hardship dwelling, hard set irrigation on 4 acres of farmable ground. No chance of any building close by due to zoning and that will never change. I anticipate getting double that 50K back on top of what we were going to ask. I won't pay a realtor to sell the place, I have bought and sold 6 houses in the last 3 years without a realtors "expertise". Made good money on all of them too.

I truly do not think people in the Portland and its outlying areas have any idea about what kind of population impacts they are going to see in the next ten years. They have no idea what traffic is going to be like, and the commute times are going to get horrendous.

We already have 2 acres in Central Oregon paid for ready to build on. At my age, 59, it will be a nice manufactured home and shop, all cash with proceeds from our property over here. I will sit on my patio watching the sun set on Smith Rock while arranging my flies for fishing the next day.

 

[notazombie]

I'm in a similar boat. My house lists next Thursday. There is almost a $250k range in "estimated value" among all those sites. Zillow actually has me on the low end. I'm not really sure what goes in to their calculation but I can tell you there aren't any comps anywhere around me. In the end, it's worth what I can get. My realtor seems fixated on stupid details like shower fixtures and is losing sight of the bigger picture -- it's on an acre with 2 large shops in the middle of town. The people who will be shopping for a place like this aren't going to get hung up on small details like that. Which brings me back to, it's worth what I can get for it. We'll see how it plays out.

 

[Gaucho Gringo]

Evidently your realtor is not very well versed in selling your kind of property. I think too many of them watch home improvement & flipper programs these days. I went through 3 realtors trying to sell my first house. The last time I went with a rather specialized realtor and the house sold in one day and $12,000. over listing price. Good luck on your sale

 

[The Heretic]

I'm in a similar boat. My house lists next Thursday. There is almost a $250k range in "estimated value" among all those sites. Zillow actually has me on the low end. I'm not really sure what goes in to their calculation but I can tell you there aren't any comps anywhere around me. In the end, it's worth what I can get. My realtor seems fixated on stupid details like shower fixtures and is losing sight of the bigger picture -- it's on an acre with 2 large shops in the middle of town. The people who will be shopping for a place like this aren't going to get hung up on small details like that. Which brings me back to, it's worth what I can get for it. We'll see how it plays out.

Dump that realtor

 

[CoastRange57]

Dump all realtors. They screw up more deals than even novice sellers. Just my experience reinforced by horror stories every day.

 

[notazombie]

I'm not too worried. She works for me. I set the price and set the terms. The place will sell itself. She's just getting paid (a lot) to do the paperwork. I've seen more people screw themselves by doing by-owner sales than I have seen realtors screw up. CR57 sounds like the exception. I don't have that much experience and may never sell another house again. I already bought my new place. It was a steal because the seller had no realtor and did an absolutely horrible job promoting it. In fact, since I bought the place last fall, I've already been offered 50% more than I paid.

 

[bgdawgrr]

I'm a Realestate broker and investor. Zillow et al can easily be 20% or more off. High and low. Nothing beats a COMPITENT Competitve Market Analysis.
I would be happy to do one for you, except I'm in WA and don't have access to OR MLS data.
The more unique the property, many times the harder to set a price. That's where the art comes into valuation and automated programs just can't do it.
Right now I have a listing priced at $839k. If it was a few miles away, I guarantee it would be closer to a million and sold in less than 2 weeks. We got "trapped" into a price because a neighboring house was on market @$835k and our property was superior in several way (land, sq ft, upgrades etc) and owner did not want to sell for less. Other house has been on market for almost 90 days.
Where Zillow gets ppl in trouble is the Zestimate. Another new listing I recommended a $299k -$309k price point. $299k would have created bidding war and easily gone 10-20k over asking. No matter how much real life data I presented, owner insisted Zillow and Redfin said his house is worth $319-$340k. It's not, even in this crazy market. Seller will have to learn the unfortunate fate of Days on Market and price reductions. This also kills negotiating power. I pray I'm wrong and Zillow is right, but you are paying me a good percentage of the sale price on my expertise, why fight it?

I believe, bar a catastrophic event like a new war, this market run has a year or so left to the very top. Prices are higher than before the 08 crash and inventory is crazy low. It is scary. If you seriously want to sell in the next 1-5 years, now is the time. These things run on ~10 year cycles. Yes, next year you may get 5% more, or 10-15% in two years, but is that worth it vs a possible 30% drop and being unable to sell for another 8-10? That choice is very personal. With values as is, another option is refi at these rates, take cash out and sit back.
Feel free to contact me if I can assist anyone privately.

 

[The Heretic]

I can't really sell until I get close to retirement (best case, 2020, unless I am forced to retire). I need a place to live that has a reasonable commute - I already commute an hour each way. I want to live further out - maybe in the coast range - but I can't hack a 2+ hour drive into work.