Could low recorded sale prices be refinancing?
Hi–As some of you may know I bought a house last summer that I absolutely adore after a year and half of searching. I still have the real estate bug and often look at houses for sale and houses that have recently sold to see how the numbers match up to what I paid for…
Hi–As some of you may know I bought a house last summer that I absolutely adore after a year and half of searching. I still have the real estate bug and often look at houses for sale and houses that have recently sold to see how the numbers match up to what I paid for my house (just curious). Zillow is reporting a lot of homes as selling for about a 3rd or even a quarter of its “zestimate” (i.e. an $800,000 brownstoner going for $250K). There were so many that I started to wonder if I missed out on some brownstone fire sale. Then I thought maybe alot of people are refinancing these days b/c of the good rates and that b/c refinancings are publicly recorded, Zillow and similar websites may be interpreting that information as a “recent sell”. Is that a reasonable presumption?
go to trulia.com and find “comparables” in your area. Basically something which is in the same area and about the same sqft with the same details. Then you can compare your price to the comparable price. Also look at the per/sqft trends. It is hard to trend house prices in some area. i.e. in bensonhurst a lot of houses on large properties were sold to developers and turned into condos. It means, that sale price of the lot was 1MM before and become 4 condos 300K each. But from the retarded stats point of view the house price in the area went down from 1MM to 300K.
They’re not refinancing, they’re sales. As to the low prices in Bed-Stuy, it’s one of the hardest hit neighborhood when it comes to foreclosures in NYC. What you are seeing are short sales and REO (Real Estate Owned by banks.) The houses usually have limitations, and come as-is, meaning they can’t be financed conventionally, so you are seeing the value of a house that cannot be mortgaged and most likely needs new systems before it can be put on the market.
I looked at 334 Putnam as an example. It just sold for 250K, which seems very low. It’s 17′-wide, 3 stories, and 4-family, so you’re probably looking at 2 studios and 2 floor-through, pretty cut-up for such a small house, and probably needing some major work. There is the unknown occupancy situation: is it vacant or occupied by long-time renters who pay very low rents? Look at it from the point-of-view of an investor: you have to front the money, it may take a year and 150K to turn around, you have transaction costs and you need profit for your time and effort. An OK renovated small house like this, likely with minimal details, will sell for 560-600K. It wouldn’t take too many bad surprises to eat all the profit, but if you do it as a business, you’d work on 4 or 5 houses at a time, and spread the risk so in the end it works financially, especially if you’re already in the game (as a lawyer or a broker or a developer.)
There are many shady dealings that can make the sale price look lower on zillow than what the buyer actually paid; a known practice is the seller of a short sale property takes an illegal kickback from the buyer, this is bank fraud, but it happens.
Fire damaged properties sell for much lower, obviously, but that isn’t recorded.
Fraudulent pre-foreclosure appraisals lead to lower selling prices on paper, but where the realtor takes an illegal percentage of the lowered price.
I’m sure there’s more…
Refi appraised values are not recorded and aren’t shown as recent sales, but in the example I looked at you can be pretty sure a bank loan that was recorded last month would have been for no more than 80% LTV. So you can infer a value range from the mortgage amount. I don’t know why people like to say zillow estimates are “wrong”. They take some available data (recent sales, assessed values, square footage, etc.) run it thru their formula and give you a number for free. From what I can tell, they’re generally in the ballpark. Of course zillow doesn’t look at the condition and doesn’t know the ins and outs of the local market. Of course it’s not as accurate as a professional appraisal that costs 400 bucks.
I’d be curious to know what any of the zillow critics thinks the “right” number would be for 334 Putnam or any property where you don’t agree with the zestimate.
Refinance Appraised Values are not recorded. Zillow Zestimates are almost always wrong. I would not put ANY stock in Zillow zestimates. Distressed sales and foreclosures will scew those numbers significantly. Quit claim deeds for $1 will also mess with the numbers.
Adam Dahill
WCS LENDING
adahill@wcslending.com
i messed up the numbers, but it was a 475k+ loan and a 646k zestimate working out to a similar LTV.
In that zip code a lot of those are going to be distressed sales – foreclosures, short sales. Checking acris for an example 334 Putnam Ave recently sold for $250k, after Wells Fargo took it back from a previous owner. Current owner who bought the REO property was more recently able to get a mortgage for $485k so the zestimate of $684k works out to 75% LTV, which is plausible.
The prices were listed for brownstones not apartments. Try looking for yourself. I put in recent sales area code 11216. If it’s acccurate, there are alot of people getting divorced.
Uh, could it be sales of apartments from all over NYC?