It’s been a while since I’ve written an article. I miss writing and I miss you! So, first of all, thank you for being here to read articles from my blog! I’ve relied heavily on guest bloggers for a while, and so I’d like to also thank all of my guest bloggers who have provided meaningful content.
I know most of my readers are interested in appraisal and real estate-related topics. So, here’s one for you… Zillow data!
I’ve written about Zillow in the past. Primarily about how unreliable their Zestimates can be. While that’s true, Zillow does provide some great data. However, before you rely on it as a data source, there are some things to keep in mind. Today, let’s talk about their reported finished square footage.
FINISHED SQUARE FOOTAGE
On more than one occasion some who have read my appraisal reports felt that my opinion of value was too high. They felt that way because of sales they saw on Zillow that appeared to be comparable and sold for less than my opinion of the market value of the property I appraised. Why?
One of the primary reasons has to do with what they report as finished square footage. Usually, at least from what I have seen, they include the basement finished square footage in their finished square footage estimates. Is this misleading? Not really, because they only state that this is “finished square footage”. So, what’s the big deal?
Appraisers understand that in many cases, the below-ground finished square footage has a different value per square foot than above-ground (grade) square footage. To lump them all together can lead to some misconceptions about value.
Here are some examples of what Zillow’s finished square footage reflects versus the county auditor in my area:
8151 Montello Rd. Independence, OH – This is a ranch-style home reported in Zillow’s as having 3,868 sq. ft. The county auditor’s finished above-ground square footage is 2,094 sq. ft. The MLS reflects 2,094 sq. ft. of above-ground finished square footage and 1,774 sq. ft. of finished basement area. See Zillow’s information on the top pictures and the County Auditor’s information on the bottom pictures.
7447 Midland Rd. Independence, OH – This cape cod style is reported in Zillow as having 3,082 sq. ft. of finished square footage. The county auditor reflects the property as having 1,413 square feet of above-grade finished square footage. The MLS reflects this property as having 2,146 square feet of above-ground finished square footage and 936 sq. ft. of finished basement area.
7975 Dalebrook Rd. Independence, OH – This ranch-style home is reported in Zillow as having 3,140 sq. ft. of finished square footage. The county auditor reflects the finished above-ground sq. ft. to be 2,040 sq. ft. The MLS reflects the finished above-ground sq. ft. to be 2,040 sq. ft. with 1,100 sq. ft. of finished basement area.
I think you see my point. Try this out where you live. You might be surprised! If you were buying a home, and you were told that it was a 2,000 sq. ft. home, would you expect the 2,000 sq. ft. to be above ground, or would you think of a 1,000 square foot ranch with a fully finished basement that offers 1,000 square feet of finished area? I think if a buyer was told that the home had 2,000 square feet, they would automatically assume that it was above-ground square footage. Most buyers would not consider the basement in their minds, even though the finished basement would clearly add value and usefulness.
A COUPLE OF EXAMPLES OF VALUE MISCONCEPTIONS
Let me give you a couple of examples of how some did not understand what Zillow included in their square footage and how it led them to a faulty value conclusion, at least in my opinion.
I recently appraised a home for a divorce. The mate on the opposing side accused me of appraising the property at a value that favored my client. They felt my opinion of the market value of the marital property was too high based off of Zillow sales that they found.
The problem is that the sales they looked at had significantly smaller finished square footage than their property. However, because Zillow included the finished basement areas in the finished square footage of the sales they found, it gave the appearance that they were larger in size than they really were, at least in terms of above-ground finished square footage. The property I appraised was not only significantly larger in terms of above-ground square footage but also had a partially finished basement that they did not consider in their own analysis.
This led them to the conclusion that their home’s market value was less than I appraised it for. Interestingly, my client, the attorney for one of the parties getting divorced, gave me permission to point this out to the opposing mate. Of course, they didn’t accept my explanation. That’s okay. It only confirmed to me that my opinion of value was supported by the market. I did appreciate the opportunity to relook at my work to make sure it was reflective of the market.
Another situation occurred several years ago when a homeowner hired me to appraise their property for a tax appeal. My opinion of their home’s value was also higher than they anticipated, for the same reason. The Zillow sales they looked at, gave them the view that the homes they thought helped their tax appeal case were comparable. However, they did not understand what Zillow included in their finished square footage, which led them to an unsupported assumption of what their property’s market value was. In that instance, after explaining what Zillow considers in their reported finished square footage, and then walking them through the sales I used versus the sales they were looking at on Zillow, they were very appreciative of my work, even though it didn’t really help their tax appeal case. It’s always nice when an appraiser’s hard work is appreciated even when the results don’t benefit them.
In both instances, it would have been helpful to have understood what Zillow includes in their reported finished square footage and to factor that into the square footage of their home when making comparisons.
Concerning Zillow’s Zestimates, I think what they consider as finished square footage can also throw off the accuracy of their Zestimates!
My advice to those using Zillow as a tool for finding comparable sales is to understand what Zillow is reporting and then compare their home consistently. As I mentioned at the start of this article, many times, the price per square foot for below-ground finished square footage is different from what above-grade finished square footage can demand from the market. So, you must be careful when making this comparison. I recommend hiring a qualified real property appraiser to appraise property when you need a supportable reflection of the market.
I hope that you found this information to be helpful. Thanks for being here! More blogs to come!
Since we are on the topic of accuracy, how accurate is the groundhog on Groundhog’s Day? I leave you with a little video that covers this topic!
Okay, how about one more fun video in case the groundhog is wrong this year. We still have some fun to look forward to…
Have a great weekend!
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Here are some links to other articles I think you might also enjoy…
Housing Numbers Are Still More Powerful Than Its Letters Or Symbols – Housing Notes by Jonathan Miller
Appraisal Modernization is Here!!! Yesss! – Voice of Appraisal with Phil Crawford
The challenge of pulling comps in 2024 – Sacramento Appraisal Blog
Housing Statistics for Beginners, Part 3 – Birmingham Appraisal Blog
Appliances for FHA appraisals – APPRAISAL TODAY
USPAP and Neighborhood Analysis – Tim Andersen, The Appraiser’s Advocate Podcast
Why I Still Love Real Estate Appraising – DW Slater Appraisal Blog
What is “The Market”? – George Dell’s Analogue Blog
Building Your Personal Brand – The Real Value Podcast with Blaine Feyen
For my readers in the CLE area… here are some articles related to news in our local area that you may enjoy…
Woof Woof: Destination Cleveland’s ‘Dog’s Day Off” spout touted the city during Puppy Bowl – FreshWater Cleveland
Solar Eclipse 2024 – Ohio Department of Natural Resources
We don’t have too many basements in my area. It would make such a massive difference in the stats to include the basement though. Wow, what a headache when it comes to data. That could really mess with lots of the stats I pull if it wasn’t uniform.
It really makes it challenging out here! But it’s par for the course!
Zillow’s use of basement area as living area causes me problems several times a year.
Thank you for writing in! It really can make things difficult. Perhaps they will change things in the future. All we can do is educate our clients and the public on things like this. My best to you!