The Fuzzy Math of Home Values

Cat Damiano

Mortgage Wars
Sep 10, 2007
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Colorado
www.loansafe.org
SmartMoney Magazine: The calculations behind online estimates is adding confusion to an already tricky housing market.



Jason Gonsalves worked hard to turn his 6,500-square-foot stucco-and-stone home in the suburbs of Sacramento into the ultimate grown-up party pad. Inside are the game room, home theater and custom wine cellar. Outside, there's the recently added piece de resistance -- a wood-burning pizza oven, kegerator and searing station, all flanking an infinity-edge pool that overlooks the lapping waters of Folsom Lake. A spread like that doesn't come cheap, of course, so when interest rates fell recently, Gonsalves, who runs a lobbying firm, looked into refinancing his $750,000 mortgage. That's when he got some startling news -- even as he was putting the finishing touches on his home, it had dropped more than $200,000 in value over a seven-month stretch.

Or at least, that's what one popular real estate website told him. Another valued Gonsalves's pad at a jaw-droppingly low $640,500. And these online estimates left him all the more confused when a real-life appraiser, assessing the house for the refi loan, pinned its value at $1.5 million. "I have no idea how those numbers could be so different," Gonsalves says.

The Fuzzy Math of Home Values - Yahoo! Finance
 

OverandDone

LoanSafe Member
Sep 2, 2011
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"Steve Levine, a real estate agent in Shrewsbury, Mass., says he recently changed his home description on one site, adding the fact that he has a finished basement. Over the next six months, his home rose from $516,000 to $558,000 -- a healthy 8 percent -- while a neighbor's nearly identical home sank in value. Levine says he has no way to tell how big an impact his update made, "but being able to change the facts is one more tool for manipulating the system." The sites say they believe intentionally wrong changes are rare, but acknowledge they can only go so far policing those tweaks. "It's not 100 percent bulletproof," says Homes.com's Doyle."

I wonder how this could work for raising the estimates of your home in the case of market value for auction purposes? I know the online listing for my home foreclosure has quite a low estimate on realty trac and it shows a zillow estimate is used. I see you can also register at zillow and update your home description. It says my home is 5 rooms (actually 8) no basement (has a full finished basement) 3 BR (4BR) and 1 bath (2 baths).