The Salvation Army needs bell ringers

Every November and December the Salvation Army seeks volunteers to ring bells at various locations to catch the attention of shoppers willing to donate money. During the holidays, the Salvation Army focuses on collecting donations to help people on a national and international basis.

Most people are familiar with the organization’s name, but do not always know what it is the organization does. The short answer to that is: A lot. The Salvation Army is a non-profit organization that provides charitable assistance to people in every zip code in the United States, as well as in 127 countries across the globe. In the U.S. alone, it helps approximately 30 million people in need. In 2015, the organization reported that their help in the U.S. included providing “58.4 million meals, nightly shelter for 10.8 million people, treatment for 200,000 people in 142 rehabilitation facilities, more than 400 after-school programs, and immediate and long-term assistance following disasters to 382,000 people”. They have been helping people for 150 years.

The organization has an extraordinary impact on the communities it serves and you can be a part of that. In November, until Christmas Eve, the Salvation Army asks people to donate time and ring a bell at a collection location on behalf of the organization in what is known as Red Kettle events. You have almost certainly seen others do this in front of grocery stores and other locations, but you may not have realized they could use your assistance too.

The national website for the Salvation Army is here. To read more about all the ways the organization and its volunteers help people click here.

If you live in the Manchester, NH region you may learn about volunteer opportunities on their own website or you may call 603-627-7013 to find out how and where you can help.

The Nashua, NH Salvation Army website is here.

If you do not have enough time to ring a bell you have the option of making a donation via the organization’s website.

The Zestimate Project: An Introduction

A bane of a realtor’s existence is the Zillow.com “Zestimate”. The Zestimate is the website’s estimated market value of a property – whether it is for sale, sold in the past, or off the market. When a home is offered for sale on Zillow the website automatically provides an estimated value of the home and places it near top of the page, just below the asking price of the property for viewers to see. It appears as follows:

1 Grove

In the example above, the Zestimate values the property on 1 Grove Court at $387,805. The house is a 4 bedroom colonial, with 2.5 baths that sits on just over an acre of land. The value Zillow has provided is considerably lower than what the sellers are asking for the home. $72,195 lower to be exact. Why though? Is the home overpriced? Is Zillow using poor sales comparisons in its estimation? What gives? And more importantly, is the Zestimate in this case, and others, even accurate? 

The above questions, combined with endless conversations and debates over this seemingly benign valuation tool have prompted me to examine this matter further and decide – at least for myself – once and for all whether this tool is helpful to buyers and sellers, or harmful. Thus this post begins what I am now calling The Zestimate Project. My project will consist of research into past and present sales in Southern New Hampshire to track the accuracy of the Zestimate, shed light on the strengths and weaknesses of the tool, and propose recommendations for improving it if applicable.

Going back to the first home example above on Grove Court, I scrolled down to the bottom of the listing page to determine what comparisons (comps as we call them in realtor speak) were used to calculate the estimate. The homes used are as follows according to the tiny print at the bottom of the page:

47 Garden Drive in Litchfield

2 Garden Drive in Litchfield

Let’s discuss these two properties for a moment, from a valuation perspective. 47 Garden Grove was last listed on the MLS (multiple listing service) in 2014 for $329,900. The listing did not sell and subsequently expired. The home is presently offered for sale on Zillow by the owner. It still has not sold and therefore is not a valid comp. However, it is also not a valid comp for a couple of other reasons. A look at the expired listing from 2014 shows this home was built in 1983. The one on Grove Court was built in 2002. 27 Garden Drive has a 2 car garage and is a cape style home. 1 Grove Court has a 3 car garage and is a colonial. A look through the photographs on Zillow for both properties demonstrate the many differences between the interior and exterior aspects of the homes. They are not reasonable comps and 27 Garden should not even be used as such by Zillow because it has not even sold.

The next property Zillow listed at the bottom of the page, and claimed was comparable, is 2 Garden Drive. Zillow states, “Another comparable condo, 2 Garden Dr recently sold for $290,533 on 06/05/2015”. None of these homes are “condos”, but other than scratch my head over that description I don’t know what to do with that information and have no knowledge of where Zillow came up with that. The homes discussed herein are single family residences. Not condos. 

In reference to 2 Garden Drive, a home that sold almost exactly one year ago is not a good comparison property. Second, the home itself is not comparable for other reasons. 2 Garden Drive was built in 1973, instead of 2002. It states on the MLS that total finished square feet is 2,366. The total finished square feet for 1 Grove Court is 3,021. The list goes on.

The difference of 655 in square feet is important to note. I will preface my next statements with an acknowledgement that I am a realtor, not an appraiser. I am well versed in providing valuations for sellers in the form of a comparative market analysis, but a true appraisal is exceptionally detailed and thorough. That said, square footage is an important aspect of a home’s value. The difference of 655 square feet might seem minor, but if an appraiser were determining the value of either property he or she would choose recently sold properties that were as comparable as possible in terms of size, age, condition, square feet, etc. and then make adjustments to the value of each comparison property to bring it in line with the subject property. In simpler terms, if the comparison property for example has 200 more in gross living area (square footage) then the property being appraised, the appraiser would deduct an amount of money from the comparison property based on a determination of what each square foot is worth. I have reviewed a wide range of appraisals completed on properties I have sold and found there is some variation in terms of the value attached to square feet that depends on many factors, including locality. An average, based entirely on what I have seen in local appraisal reports I have viewed is about $25 per square foot that is above grade and finished. Sometimes higher and sometimes lower. If we use this average to determine the difference in value between 1 Grove and 2 Garden, merely going by the square footage difference, then we get $16,375. That’s no small chunk of change.

The above does not take into account the age difference between the properties, 2 Garden Drive having one less garage bay, the differences in exterior and interior updates, and so much more.

The Zestimate in this case only refers to the above two homes as comparison properties. If it is using others it does not state as much, but realistically the website should disclose all homes used for comparison purposes to allow readers to make decisions about the Zestimate’s reliability in any given situation. The comparisons used for Grove Court consist of a home that sold a year ago and one still on the market. But now let’s look at recently sold comparison properties on the MLS to see how far off the Zestimate is from actual comparative properties. I will use three properties for this purpose.

Property 1: On May 5, 2016, 9 Riverview Circle sold for $410,000. The home has 3,116 square feet, 4 bedrooms, 2.5 bathrooms, and a 3 car garage. However, this home was built in 1986 instead of 2002 and lacks the multitude of updates found in 1 Grove Court. That said, 9 Riverview is a lovely home, with plenty to offer, and is a closer comparison than the ones chosen by Zillow. But here’s the kicker. The current Zestimate for 9 Riverview Circle is $494,876, even though the home sold for $410,000 this month. If the Zestimate is truly accurate then the buyers made out well and the sellers…not so much.

Property 2: On April 1st, 2016, 21 Moose Hollow Road sold for $455,000. It has 3,884 square feet according to the MLS, 4 bedrooms, 2.5 bathrooms, and sits on just over an acre of land. It has one less garage bay than 1 Grove Court, but is updated throughout the house and was built in 2005. The home does not appear to have as many updates as 1 Grove, and is lacking some of the structural architecture that makes 1 Grove unique and aesthetically appealing, but 21 Moose Hollow is a fabulous house and would serve as a good comparative when valuing a home like 1 Grove Court. The current Zestimate is $470,283 despite the fact the property sold almost two months ago for $455,000.

Property 3: On December 11th, 2015, 15 Moose Hollow Road sold for $457,500. The home is comparable in that it is extremely similar in square feet, has 4 bedrooms, 2.5 bathrooms, is a colonial style home, and sits on over an acre of land. This property only has a 2 car garage and is lacking some of the cosmetic and structural features that make Grove Court an appealing property, but nevertheless 15 Moose Hollow is nothing short of a gorgeous home that appears well kept and cared for in the photographs. The current Zestimate for this home is $464,659, even though it sold for $457,500.

In summary, the three recently sold properties I found on the MLS are more in line with the price point of 1 Grove Court when one takes into account size, land, updates, special features, number of garage bays, location, and other factors than those used in the Zestimate (or at least the two the website suggests it used). It will be intriguing to see the final sales price for 1 Grove Court in light of all this information.

Over the course of the next few months I will periodically track the Zestimates of properties in the Southern New Hampshire region, including Litchfield, Merrimack, Amherst, Bedford, Nashua, and Manchester (perhaps other towns, but right now I am limiting it to certain markets) to make estimations about its accuracy within those markets. I would also like to conduct a survey at some point of buyers and sellers to find out how much faith they place in Zillow’s Zestimate and learn the ways in which the Zestimate impacts people’s perceived value of the properties it valuates. Because maybe, just maybe, the Zestimate could use some improvement in areas of consistency and accuracy.

Time will tell!