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Thursday, August 13, 2009

Free online real estate aids: Sometimes you get what you pay for

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    Many homebuyers and sellers have lost trust in the mass media's ability to distinguish hype from fact when reporting on real estate.  They have turned to the Internet as their information source of first resort.  Mega information sites like Trulia and Zillow scan tax and sales records to come up with estimates (Zillow cutely calls them "Zestimates") that buyers use as a basis for negotiation and sellers use as a foundation for their listing prices.  The problem is that the Zillow estimates can be misleading, sometimes dramatically so.
    Here's an example:  I received a listing via email from Michael Kussdaufuskie2.jpg of Daufuskie Properties Realty for a big, beautiful home on Daufuskie Island; the house is located at 27 South Range Overlook (click on photo for larger image).  The asking price is $2.2 million, which despite the water views, walk to the beach, pool and gourmet kitchen in the well-appointed 4,400-square-foot home, seemed at first blush a little out of proportion to the current market conditions.  Homes a little smaller had been listed recently at substantially lower prices.  The surrounding community of Haig Point, lovely and peaceful, is nevertheless a ferry ride from anywhere, and that ferry adds substantially to homeowner fees.  Free membership for the club and its terrific 29-hole Rees Jones golf course is counterbalanced by the substantial dues payments to live and play at Haig Point (the ferry adds atypical costs).  On the other hand, those who covet their privacy or are allergic to fossil fuel pollution will find the atmosphere on Daufuskie priceless; no private cars are permitted on the island.
    I visited Zillow.com for an estimate of the home's value.  Zillow, which claimed to have updated the home's value a couple of days ago, indicates the market value at $1.409 million, or a whopping 36% below the asking price.  Although the web site provides a possible range of $1.535 million on the high side and just a little over $900,000 on the low side, the difference between the asking price and Zillow's estimate is a head-scratcher.
     I contacted Daufuskie Properties' Mike Kuss.  Mike is a grounded guy,
The agent who represents you as the buyer is paid from the commission on the sale of the home, not by you.

and certainly not given to taking a listing at a price he knows won't sell.  He indicated that, last year, a home similar in size and features to the $2.2 million home sold for $3 million.  The market may have receded a little since then, but not enough to explain the nearly $1 million difference between the asking price of Mike's listing and the home that sold just a year earlier. 
    Unique homes on a private island may just be too much for Zillow's algorithms to handle.  The lesson here is not to rely on such general pricing tools but rather to do your homework on the market you are considering buying into with the help of a well-qualified buyer's agent.  I know many of them in the southern U.S., so if you are in the market for a retirement or vacation home, please contact me.  Remember, the agent who represents you as the buyer is paid from the commission on the sale of the home, not by you.  Sometimes the best things in life are free.
Read 3364 times Last modified on Thursday, 13 August 2009 03:20
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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.