Melissa Savenko's Richmond Real Estate Review

The Zillow Rant OR Why Zillow Zucks

I wrote this e-mail yesterday in response to a perfectly legitimate inquiry from a gentleman about one of my listings, which iper the "Zestimate" is worth $465,000 but listed at $725,000.  He probably thinks I'm azy-cray after the rant he got in response to his question, but this is a subject that comes up again and again, and it makes me N-U-T-S.

Let me also state this is all purely my personal opinion, based on my experience and the fact that I specialize in historic properties, in predominantly old City of Richmond neighborhoods.  The home he asked about, 3607 Seminary Avenue, is on the Northside equivalent of Monument Avenue.  These homes were built for the V-E-R-Y weatlhy folks who wanted a "suburban" yard, back in the early 1900s, rather than the townhouse/rowhouse feel of Downtown, the St. John's District in Church Hill, or the Historic Fan District.

But the poor guy got more than he bargained for with my response, and probably imagines me frothing at the mouth.  So sorry for that.  [:)]

******

Q:  Zillow indicates an estimate of $465,000.  Why the discrepancy?

A:  Ahhh...you have asked me the question that leads to one of my favorite rants.  Here's the short answer:  Zillow is completely ineffective in certain real estate sub-markets.  The "Zestimate" for 3607 Seminary is flat out wrong.
 
Here's the longer answer:  Zillow may be effective in certain real estate markets and sub-markets.  For example, when evaluating subdivision properties, I think Zillow is a somewhat adequate tool.  However, when used on historic properties and in historic neighborhoods, the Zillow estimate is just about useless.  Here are the main reasons:
 
1.  Historic homes cannot be "comped" the same way subdivisions can, on a pure price per square foot ("PPSF") basis.  The actual value of a historic home depends in large part on not just the square footage, or the lot size, but also on the level and quality of original detail and the renovation done over the years.  Since many types of renovation do not require building permits, residences may have been significantly upgraded and the taxing authority may not be aware of these significant improvements.  Therefore, the value of the improvements is not added to the property's tax assessed value and the tax assessment is not re-evaluated, other than the small formulaic increases applied based only on statistical models.
 
2.  Zillow is based on a "pull" of pure public data - square footage, lot size, tax assessed value, etc.  In the absence of other hard data, such as a proximate [2-3 blocks] sale of a similarly sized property, the Zillow data is primarily based on the existing tax assessed value.'
 
3.  If you have a property like this, that has been in the hands of one owner for 20+ years, there is no other hard data for Zillow to pull.  So the "Zestimate" is based almost completely on the tax assessed value.
 
Let me give you an example that I think will help.  A family company purchased a 3,600 square foot property in Richmond's Fan District for $515,000.  The house had not transferred since the early 1960s.  The house had not been updated since that time either, and was configured as a triplex.  Before the purchase, the Zillow "Zestimate" was the tax-assessed value of the property, which was in the $300,000s, I  believe, despite the fact that other homes on the same block were assessed at much higher levels and/or had sold recently for prices in the $700,000+ range.
 
The company did a gut renovation on the house, using historic tax credits.   That house was "new" in many respects, in an old house shell - new electric, new HVAC, new copper plumbing, all new kitchen, all new baths, huge deck, paver patio, off-street parking, etc.  I sold the house for $880,000.  However, the "Zestimate" at the time of the sale was....$550,000.  In other words, Zillow valued the property at a full $330,000 less than the Sellers received in an arms-length transaction for the sale of the property.  [Although I will note the "Zestimate" was just about, and even higher, than the most recent sale price of that particular home of $515,000]. If appraisers just used Zillow, that deal would never have closed.  Thank God appraisers use actual, recent sales data.  The house appraised, no problem.
 
I just pulled the Zestimate, and Zillow currently values that property at $869,000. 
 
SO....this is just to try to explain why Zillow's "Zestimates" [God, even the cutesy NAME annoys me!] are so daggone useless in places like Ginter Park, the Fan, the Museum District, the near West End.  If you have a house that has not transferred in 10+ years, if you are in a historic neighborhood, if the tax assessed values for your locality are traditionally low - which is true of many City properties - the Zestimate is going to be worthless, IMHO.

I really could go on and on and on on this soapbox, but I don't want to bore you to tears.  I hope this at least helps.  As far as 3607 Seminary goes - for the right person, who wants a mansion-style and -sized home, who wants a glorious yard and needs a lot of bedrooms, with a strong appreciation for historic architecture, and a willingness to put one's own stamp on the property by upgrading kitchens and baths - well, this house is a great value for the price.  But unfortunately, in this market, "value" has become an almost worthless concept.  All people care about is "price," which is a completely different animal.  This leads to the scenario when buyers want a "steal, not a deal."  I'm tired of it, because it wastes everyone's time.  That is only going to happen when buying distressed property, and/or when buying from a distressed seller.  And from a personal standpoint, I get a lot of heartburn when buyers are kicking someone who is already down.  Beat up the banks all you want, but I don't want to help you get a "steal" from a little old lady who just lost her husband.
 
Another piece of advice, if you are going to navigate the real estate market on your own:  Know the difference between the distressed seller, and the guy who has put his home on the market at a fair price and doesn't have to sell.  You'll save yourself and everyone else a lot of time and energy.  Right now I have several sellers who either (i) don't need to sell their homes, but would like to take advantage of the "deals" [NOTE:  NOT "steals!"] in the move-up home price range, or (ii) who are ready to downsize into something smaller and sock some cash away, if they can get a decent price for their home.  Put differently:  Most people will not entertain 20% discounts - or even 10% discounts - off list price.  Don't waste your and their time by making that your starting point.  You're just going to make people really, really unhappy with you.  If that's what you want - the crazy under-priced purchase - then focus on bank-owned properties, or go to foreclosure sales. 
 
Phew!  This response to your very brief question about Zillow turned into an epic novel!  My apologies, this is an issue that I've dealt with on more than one occasion, and it gets under my skin, clearly.  Moral of the story:  I know we real estate agents are almost universally reviled, and sometimes with good reason.  But I think this is an example of why just having access to information, without the skill set and experience to filter and appropriately analyze the information, isn't some great revolution at all.  In fact, it's a hindrance, not a help.  Here's my previous blog on that specific topic.
 
Thanks for your inquiry, let me know if I can help you in any way with your search.

*******
 
Them's my opinions, and I'm sticking to them. Hopefully the Zillow police won't come looking for me....

Baseball in the Bottom...I'm Only on Page 29.....WAH!

Okay, I'm slogging through the September 2008 report, "Boulevard Diamond Stadium Highest and Best Use Analysis" and I'm only on Page 29.  My head hurts.  I'm AM sorta giving myself a pat on the back for the fact that the experts so far are also proponents of an approach I had suggested a while back for the Boulevard site - in the best scenario you bulldoze EVERYTHING - including the Arthur Ashe Center and the SportsBacker Stadium - and start over.  I threw this out as my personal preference, in a post on redeveloping the Boulevard and then another post responding to a criticism of demolition as anti-"green."  The experts seem to agree a clean slate at Boulevard would allow for the optimal redevelopment, and ultimate highest return, for the site.  I think we can all agree that whether this suggestion is politically feasible is a completely different story.

HOWEVER, I'm not anywhere near through this monster.  And it's past my bedtime.  So I'll pick it up again sometime tomorrow.  I'm starting to realize this may be a week or two of bedtime reading.  But at least when I'm done FanGuy can't accuse me of being uninformed.  [;)]

Commentary on Stimulating the Housing Market - We Need More Properly Structured Incentives!

D*mmit.  I hate it when someone writes a piece on a topic I wanted to address, AND does it better than I could have.  That exact circumstance occurred in today's Commentary section of the Richmond Times-Dispatch, in a piece titled "More Must Be Done to Revive Homebuilding" by Russ Parker, the past president of Parker & Orleans Homebuilders and the past president of the Home Builders Association of Richmond.

Now, personally, I think the title of the piece would more accurately have been "More Must Be Done to Revive HOME BUYING," both because that seems to me the focus of his suggestions and also the real crux of the issue with the economic meltdown.  I personally don't think we should be encouraging any more new home construction until such time as a good chunk of the existing inventory is under contract and/or sold.  [Sorry, Mr. Parker.  It might make you feel better to know that my Dad, a general contractor, will probably want to K-I-L-L me for that opinion!].  But I do absolutely agree with his two incentive suggestions:

1. A $15,000 tax credit for the purchase of a home this year, regardless of income level or previous home ownership; and
2. Fixing the interest rate at 4% for any home purchase.

Both of these incentives would be time-limited and capped at a total dollar amount, to incent buying NOW.

You can read Mr. Parker's piece for yourself, he succinctly sets out the reasons the current home buying and anti-foreclosure incentives aren't enough.  First, the first-time $8,000 home buyer tax credit is stimulating a segment of the home sales market that's already seen good increases in activity.  Second, it will take some time for that "flow through" from the first-time home buyer sales to work its way through other market segments of higher priced properties.  And third, saving homeowners in danger of foreclosure, while perhaps a morally correct thing to do, doesn't do anything to stimulate sales.

But read Mr. Parker's piece for yourself.  He said it better than I can.  D*mmit.

Baseball in the Bottom - Hard Data, FINALLY!

OK, first of all I am a big, giant loser.  It is 1:12 a.m. on Saturday morning and I have been on the computer for the last 3 hours.  My social life ROCKS.

But enough about me....

I came across this while trolling around the blogosphere, and it's actual, real live, quantifiable DATA.  Imagine that!  I am as excited a a kid in a candy store with a $20 bill from Grandma.  This is the 2008 report on the then "Baseball on the Boulevard vs. Bottom" debate, titled "Final Project Report: Boulevard Diamond Stadium Highest and Best Use Analysis," prepared by Economics Research Analysis.  This is also the report that the exact same independent experts are using as a jumping-off point in evaluating the current, specific Highwoods Properties proposal for the Bottom baseball stadium and ancillary development.

123 pages of analysis and back-up data, not summary and "spin," to dig through at my leisure.  YEA! 

[Really, I need to get out more].

Baseball in the Bottom - Can't We All Just Get Along OR FanGuy, Play Nice!

Jeesy, peasy, puddin' n'pie!  I'm back from a lovely vacation in Costa Rica, and I'm trying to catch up on current events in the River City, including some major proposals with real estate implications, like the Shockoe Bottom baseball stadium proposal.  While checking the blogosphere, I came across this posting by F.T. Rea suggesting a referendum on baseball in the Bottom.

Now, I personally think the most important element of this post is the comments, and the generally (IMHO) deplorable tone of the debate.  Folks, personal attacks, sneering sarcasm, and condescension don't help you make your case.  Can't we just debate the topic reasonably and rationally?

I think the referendum suggestion is an interesting one.  I think outside review of the developers' proposal, particularly digging through the projections and financials, is also reasonable.  [NOTE:  I DO wish the review didn't require $100,000 price tag, paid by the tax payers.  But c'est la vie.]

AND, here's the biggie:  I absolutely agree that someone else besides the developers should be part of the debate and analysis.  I think independent opinions should be sought from other similarly-sized communities that have invested in new baseball stadiums and academics who have studied the financial impact of baseball stadiums on tax revenues and community redevelopment.  I think it is the responsibility of our elected officials to get these independent opinions and to share them with the community to the same extent and degree that the developers are sharing their case in favor of the baseball stadium in the Bottom. 

Face it, folks.  The developers are trying to make a persuasive case FOR their proposal.  There is nothing wrong with that.  In fact, that's their job.  But we as a community need to dissect their proposal, take it apart, turn it around, pore over the projections and the figures, and make sure we have a firm understanding of all the pros and the cons BEFORE we commit to a project that is going to be here for a long, long time, and the success or failure of which we are going to have to live with.  More importantly to me - you don't get a "do over" with a historic area. 

You don't get the historic neighborhood back if this goes down the tubes.  There is no easy exit strategy for a failed single-purpose sports facility.  I also think we need to make sure we understand and are OK with what we might be giving up in the Bottom - potential heritage tourism, anyone? - in order to have a baseball stadium. 

At the end of the day,  if the community clearly understands the pros and cons of the Bottom stadium proposal and the majority in the community think the reward of a baseball stadium and the potential for ancillary development is worth the potential risk of failure or forgone alternate opportunities for that area, then so be it.  Bring on the bulldozers, I say.

But right now, but for the blogosphere and some local media, I think we're only hearing one side of the story.  And that needs to change.  City Council, time to step up and earn your pay.

"Fan of the Fan" and Update on VCU Purchase of Grace Street Ukrop's

First, it appears there is a new player on the community blogging scene, "Fan of the Fan."  Welcome to the party.  I wonder who the (wo)man behind the blog is?  It sure is prettier than mine.  And how do you get ads?  I want some!

But enough about me.....

Second, it appears the community meeting scheduled for Monday, March 30, 2009 at 7:00 p.m., when the community was to hear from VCU about its plans for the old Ukrop's site at Grace and Harrison, has been postponed until mid to late April.  Someone figured out the tiny little meeting room at the Fan District Association's office wouldn't hold nearly the number of bodies that would be interested in VCU's presentation.  Here's the text of the e-mail I received:

VCU's presentation to the Fan District Association's Board Meeting at 7 PM on March 30 has been postponed.  Realizing that a number of people might want to attend, the FDA decided to reschedule the presentation (probably mid to late April) after a larger venue can be found to accomodate the large number of interested Fan residents.

Thank you to all of you who expressed interest and planned to be present at Monday's meeting.  Watch your e-mail for a notice from the FDA of the new date, time and location.

May I suggest the Siegel Center?  [;)]

VCU Buys Old Ukrop's at Grace and Harrison, In Violation of Written Agreement with Neighborhood Associations [?]

It has been confirmed that the VCU Real Estate Foundation has purchased the old Community Pride/Ukrop's property located at the intersection of West Grace Street and Harrison, in the lower Fan.  This purchase is apparently in violation of a written agreement between VCU and the Fan District Association ("FDA"), the West Avenue Improvement Association, and the Lower Fan District Association.  There will be a public meeting held on Monday, March 30, 2009 at 7:00 p.m. at the FDA offices located at 208 Strawberry Street, at which time VCU will present its plans for the property.

Now, I have no clue what VCU has up its sleeve, but I'd be willing to bet a dime to a donut it involves multi-story student housing.  And I also predict that the FDA, along with the other neighborhood associations, is going to fight tooth and nail against VCU's march west, whatever their plans for the property.  Because here's the inherent problem if they DON'T fight the battle:  That written agreement becomes completely worthless in any other context.  Contracts have to be enforced uniformly, not willy-nilly.  It's the slippy slope argument.

Personally, I am going to keep an open mind as to whether I think VCU's plans for the property warrant my strong support or vociferous opposition.   But, I do think the decision to purchase the property in contravention of the compact with the neighborhoods has at least a strong whiff of double dealing.  That agreement was EXTREMELY hard-fought by both sides, it's hard to believe no one at the VCU Real Estate Foundation was aware of it.  If they were aware of it, and just ignored it - well, that's pretty daggone outrageous, IMHO.  Unfortunately, I think VCU has earned the suspicion, based on its ham-handed handling of "agreements" with other neighborhood groups.  [Can the Oregon Hill folks please stand up?]

On a purely process view, I think every effort should be made to hold VCU to the terms of its contract.  If there has been a breach of the agreement, VCU should be held accountable.  And if the neighborhood associations decide that they are willing to accept VCU's plans for the former Ukrop's property, I think VCU must be required to reach some kind of negotiated, written agreement with those groups that preserves the remainder of the original agreement's terms.

But that's just one woman's opinion.  It and $.25 won't get you a cup of coffee.  [;)]

New Listing - 2113 Floyd Avenue - Historic Fan District

I have a new listing (with the able assistance of my co-listing agent, Pat Petersen Robnett, of course!) at 2113 Floyd Avenue, and it's a great starter house in the Fan.  I've pulled together a photo album here, so please pop in and take a look.  I cannot figure out for the LIFE of me how to order the pictures in the order I would prefer, which would take you through the main floor of the house, front to back, then through the second floor of the house, front to back, and then out to the rear yard.  So the order is based on the date/time stamp, so they flow in the order that the photographer took the pictures. 

SO, what you end up doing is going from the front rooms back through the kitchen, out the back door, up the rear stairs, and from the back of the second floor to the front (Bedroom 3, Bedroom 2, Master Bedroom). THEN you head down the front stairs and there are a few extra pictures of some pretty details there - the stair landing, exposed brick wall and carved newel post, and a focus shot of the living room fireplace with original mantel and tiled surround.

It's not the way I'd do it, but oh, well, my technical skills are limited. [:)]

ALSO, I want to give a gigantic public thank you to my lovely friend, Betty Cwiklinski, who is the Dog Walker Extraordinaire about whom I have posted in the past.  She is the sole reason I got this listing, she sang my praises long and hard, and I am oh-so-appreciative.  I'd love to return the favor, and I cannot, cannot, CANNOT say enough good things about her and how she runs her business.  Please, if you live in the City or close-in Henrico and you have need of a dog walker or pet sitter, give her a call.  You will not believe the level of service she will give you and your furry (or scaly, or feathered...) family member.  She deserves every bit of praise I can heap on her.  She can be reached at adogsbuddy@verizon.net or 240-0609.  If you try her, you won't be sorry. I guarantee it. 

I'm Back......And Glad the Housing Market Is Picking Up! AND I Need Reader Feedback on "Top Deals" List Idea

I got home this past Sunday at 3 a.m. from vacation in Costa Rica.  WONDERFUL.  Beautiful country, super nice people, amazing wildlife.  I'll post a picture album once I can dig through all the work stuff.  But I do not recommend the return trip schedule - leave house at 5 a.m., drive 2 hours to San Jose, fly from San Jose to Guatemala, fly from Guatemala to El Salvador, fly from El Salvador to Dulles, drive from Dulles to Richmond, collapse into exhausted sleep at 3:30 a.m., just over a full 24 hours later.

But enough whining - the trip was well worth that inconvenience.  And I've come back to some good news:

1. We got another confirmed, executed reservation for the Windsor Court condominiums.  Whoopee!
2. Housing sales rose sharply - 5.2%, I believe - higher in February 2009, far outstripping the economists' projected sales decline of 0.9%.
3. I had a new listing come on the market, 2113 Floyd Avenue, and the Open House on Sunday (yes, the same Sunday I returned from the "planes, trains, and automobiles" journey back from Costa Rica) was JAMMED, we guesstimate 40-50 people came through, in approximately 25 groups.  Even better than the raw numbers was this fact:  NINE of the sign-ins and/or attendees either came WITH their buyer's agent or signed in indicating they had a specific buyer's agent.

For folks not in the business, what is the significance of those nine buyer's agent represented buyers?  It means these are actually serous buyers, READY TO BUY, not "looky loos" or tire kickers.  Put another way, more than 33% of the folks that came through the Open House are likely to buy, and likely to buy soon.

Based on what I was hearing on NPR yesterday, lots of economists and analysts are prepared to chalk up the sharp spike in February home sales as a one-time deal, a fluke, an aberration.  One talking head said it was due to the weather - a colder than average December and January depressed sales, and a warmer than average February unlocked that pent-up December and January demand. 

I'm going to be a bit more bullish.  Based on Sunday's Open House, activity at my other listings, and anecdotal evidence from other Realtors, I'm cautiously optimistic that this increased sales activity, illustrated by the February 2009 national sales numbers, is going to be a continued trend, at least in certain areas of the City of Richmond and close-in Henrico.  But we'll just have to keep watching the data, and keeping our fingers crossed.

I've got to get back into my blogging and I have a number of topics I want to cover, some of which have been on the list for a while:

• A photo album for my new listing, 2113 Floyd Avenue;
• "It's Not Personal, It's Business":  Why I Like Working with Investors;
• Update on the Status of the Certain City Schools' Physical Plants - Binford, Chandler Middle, and Richmond Community;
• Affordable Housing Week; and
• The 2009 Downtown Loft Tour.

I've been toying with writing a posting on my "Top Picks" for best real estate deals out there in the Fan and Museum District, with some Northside and West End tidbits thrown in here and there.  I'd want to keep the list on a running basis, adding as new stuff comes on.  But I'd want to explain WHY I think certain properties are such good deals.  I'm a bit gun-shy that any such list would somehow tick people off - which would not at all be the objective.  But I've already experienced the effect of unintended consequences two or three times from this blog, so I'm treading carefully here.

So, I pose the question to the readers:  What do you think about such a list?  What are the potential down sides?  What "rules" should govern?  For example, I think it would be fair, and smart, to restrict myself from including my own listings on the list.  Should there be other limits?

Any suggestions and ideas would be GREATLY appreciated.  Have a great day!  Or "pura vida!" as the Costa Ricans would say.  [:)]

UR Downtown - Historic, Green and a Great Corporate Citizen

In the interest of full disclosure, I have two personal conflicts with this story: (i) I graduated from the University of Richmond Law School in 1998, and have very fond memories of my times there; and (ii) my Dad's general contracting firm, Loughridge & Company LLC, was the general contractor on the University of Richmond Downtown project.

That out of the way, let me highlight something that I'm not sure people are aware of:  Did you know that UR Downtown is the first project in the state to be BOTH a historic tax credit renovation AND LEED certified?  ["LEED" stands for "Leadership in Energy & Environmental Design" Green Building Rating System.  To receive LEED certification, the building has to meet very exacting standards for both energy conservation and use and incorporation of environmentally friendly products]. Not only that, but the project received GOLD LEED certification, which is almost as high as you can go.

Adapt. Recycle. Renew. Reuse.  This is a textbook example of those standards in action. That's really something to be proud of, for the developer, The Wilton Companies, the contractor, Loughridge & Company LLC, and University of Richmond, the ultimate end user.  Let's hope this project gets some local, state and national recognition for successfully integrating two major enviromentally conscious construction approaches - LEED certification, and adaptive reuse of a historic structure.  Richmond rocks.