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Archive for May, 2017

Zillow: Million Dollar Loser

May 30th, 2017

TUESDAY, MAY 30, 2017

AnchorZillow Admits Contest Is Over Before It Really Started

SEATTLE, May 30, 2017—Zillow, the self-described leading real estate information and home-related marketplace, announced today that their contest (which offered a $1 million reward to the first person or team who could improve their Zestimate algorithm) was over.

Stan Humphries, Chief Analytics Officer and Chief Economist at Zillow Group, admitted that the Zestimate was in fact no more than a Guestimate that could not reliably account for many “boots on the ground” factors that impact value such as interior condition, renovations, additions, deferred maintenance, highway noise, smells from nearby factories, etc. “I suspected we had a problem when the Zestimate on my boss’ house was so off” Mr. Humphries noted*.

Mr. Humphries acknowledged that Zillow had finally come to their senses, citing the following answer to the question “Is a Zestimate an appraisal?” from their website:

“No. The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for”.

*As reported by Inman writer Teke Wiggin on June 3, 2016, Zillow CEO Spencer Rascoff reportedly sold a Seattle home for $1.05 million on February 29, 2016.  This figure was approximately 40% less than the figure of $1.75 million shown on the Zillow site the next day.

(Perhaps Zillow’s algorithm has a “Leap Year” bug along with its other shortcomings?)

A link to the Inman article is found here:

Inman article by Teke Wiggin

AnchorJust Spoofing You

While we were just having some fun with the above story, the point that we are trying to make is a serious one that is likely not understood by many homeowners.  As a Washington appraiser told us recently:

“Remember, No algorithm, however sophisticated, can quantify the value of a kitchen, a bathroom, or any room for that matter that was remodeled just before a home was put on the market. Additionally, algorithms can’t accurately measure market reaction to special features or a yard that is poorly maintained. It simply isn’t possible for any AVM (automated valuation model) to predict the value of a home with a level of accuracy sufficient to make a housing decision and in my opinion; more importantly, a lending decision!”

Ouija boards, tarot cards and…Zestimates.  Enjoy them for what they are.  When making a serious medical decision, you seek out a licensed, experienced doctor; when making an important decision regarding one of your biggest assets (your house), there is no substitute to using a licensed, experienced professional appraiser.

AnchorAppraiser Health Month: Additional Tick Warnings

In response to our article last newsletter about the dangers posed by ticks to appraisers in many parts of the country, Minnesota appraiser Frank Bigelow writes:

“Thanks for the tick article about Lyme Disease. However, we need to be more cautious about deer ticks because they also carry a disease called Powason Disease that can be transmitted to a body after the deer tick crawls on you for 15 minutes. It doesn’t have to bite and it is nastier than Lyme Disease-look up the disease and tremble”.

Susan Scutti reported earlier this month on CNN that Powason Disease cases have been reported by the CDC (Centers for Disease Control and Prevention) in the northeastern states and the Great Lakes region.  Ms. Scutti notes that there has been an uptick (no pun intended) in cases of both Powason Disease and Lyme Disease and points to early indications that the coming months will show increases in both.

The Mayo Clinic reports that early signs of Lyme Disease include:

“Rash. From 3 to 30 days after an infected tick bite, an expanding red area might appear that sometimes clears in the center, forming a bull’s-eye pattern. The rash (erythema migrans) expands slowly over days and can spread to 12 inches (30 centimeters) across. It is typically not itchy or painful. Erythema migrans is one of the hallmarks of Lyme disease. Some people develop this rash at more than one place on their bodies.

“Flu-like symptoms. Fever, chills, fatigue, body aches and a headache may accompany the rash.”

In the weeks to months that follow if untreated, symptoms or signs of Lymes Disease include expanding Erythema migrans, joint pain (especially in the knees) and neurological problems.

Frank Bigelow is right: Powason Disease can make you tremble.  Susan Scutti notes that Dr. Jennifer Lyons, chief of the Division of Neurological Infections and Inflammatory Diseases at Brigham and Women’s Hospital in Boston, reports that 15% of those who are infected and have symptoms do not survive with half of the survivors suffering irreparable neurological damage.  While most of those infected do not show symptoms, Dr. Lyons states that “You basically feel nonspecific flu-like stuff, muscle aches and pains; maybe you have a little rash on your skin, but almost certainly, you’ll have a fever and the headache.” Those with more serious illness can lose consciousness, develop seizures and have difficulty breathing without assistance.

Susan Scutti’s CNN report can be read in its entirety by clicking on the link below:

CNN report by Susan Scutti

AnchorAppraiser Health Month: Workaholic Appraisers

The May 18, 2015 issue of AppraiserNews reported on an AppraisalPort study of the length of an appraiser’s work week.  This being Appraiser Health Month, we think it important to raise the issue of the appraiser’s work load again.

AppraisalPort Asked the Question: “On average, how many hours per day do you spend working on appraisals and appraisal related business?”

5,451 respondents answered as follows:

<3 hours: 1%        3-4 hours: 1%        5-6 hours: 7%

7-8 hours: 17%    9-10 hours: 37%   11-12 hours: 23%

13+ hours: 15%

AppraiserNews responded:

Is it really a surprise that approximately 2/3 of appraisers work more than 8 hours per day with almost 40% working more than 11 hours?  What is going on here?  We attribute this to a number of factors:

1) Many appraisers like what they do. We have freedom to set our schedules and to (frequently) select those assignments that we want.  We get to be outside on some nice days, we can stay in on many rainy days.  New people to meet, new places to go, new properties to see.

2) Many appraisers need the money. While we may enjoy much of what we do, many of us have not fully recovered from the 2008 real estate and financial crash along with subsequent events (i.e. HVCC) which left many in precarious financial circumstances.

3) Many appraisers are not organized and not working efficiently. With all the advances made in the tools available to appraisers, it is constantly surprising to see appraisers working as they would have 10 or 15 years ago.

4) Are we workaholics? Anecdotally, a strong case could be made that many appraisers are workaholics.  Several of my close friends and associates come to mind (you know who you are!)

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AnchorRates & Dates

Freddie Mac and the Mortgage Brokers Association (MBA) reported downward movement in mortgage interest rates last week.

In their survey on May 25th, Freddie Mac reported that 30-year fixed-rate mortgages fell from 4.02% the previous week to 3.95%, the lowest point this year. They also noted that one year ago, the 30-year rate was at 3.64%.

The MBA reported on May 24th (for the week ending May 19th) that 30-year rates with conforming loan balances ($424,100 or less) fell from 4.23% to 4.17%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) dropped from 4.23% to 4.11% while FHA backed 30-year mortgage rates also declined, from 4.11% to 4.07%.

Mortgage applications rose by 4.4% from the previous week.  Refinance applications as a percentage of all applications rose from 41.1% to 43.9%. The FHA share of applications increased from 10.6% to 10.8% while the VA share fell from 10.7% to 10.5%.

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association

AnchorAngie’s Contest

Angie would first like to acknowledge the winner of her last contest: California appraiser Lauren Landseadel. She was the first to answer correctly that Benjamin Franklin was the author of all three quotes in the last newsletter: “By failing to prepare, you are preparing to fail”; “Energy and persistence conquer all things”; and “Honesty is the best policy”.

Today’s questions:

Who said all of the following:

1. “I said, other people can write songs, let’s see if I can. So, the first 400 or 500 wound up on the floor somewhere. Then I wrote one called Melissa”.

2. “I would like to be remembered as a – somebody who could rock your soul or make you cry with a song. And somebody who’s kind, who loved to laugh, and loved his God”.

3. “I play every show like it’s my last. Fortunately, that’s never turned out to be the case”.

a) Gregg Allman
b) Dickey Betts
c) Berry Oakley

d) None of the above

The first to respond with the correct answers wins:

One Free Regular Listing on AppraiserHelp.com

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter.

Please e-mail us at: bill@appraiserhelp.com with your thoughts!

Or call us toll free at: 877-434-2825

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at www.appraisernews.com

Regards,

Bill Collins, Appraiser Help Inc.

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