Wednesday, June 20, 2007

Home Buying Series Part I: How to get prices for any house even Mark Cuban's!

Knowledge is power in all things financial. The guy with more and better information usually wins when it comes to money. That is why when it comes to buying a house having a reliable source of independent pricing data is very important. That's where Zillow comes in. Zillow aggregates a bunch of sales data and uses algorithms to arrive at estimates of homes' values which they call Zestimates. Now the algorithms aren't 100% perfect and there may need to be some corrections, but the Zestimates should be in the ballpark for any average house. To get comps you used to have to call a realtor, Zillow lets you look at this data from the comfort of your own home.

For instance let's say Mark Cuban got sick of living and Dallas and was going to sell his home. You pull past 5424 Deloache Ave. and see a big sign out front that says, "For Sale by Owner." Knowing that you must have this house, you rush home and punch the address into Zillow. Here is what you get:

Now you know Mark's house is worth approximately $13.5 million. Thanks to Zillow you can avoid the mistake of insulting Mark by offering him only $10 million for his humble abode and having him slam the door in your face. Instead, you can step in with your $13.5 million "fair value" offer and see what Mark has to say. However, if history is any guide, Mark's not a seller unless he gets a big return (e.g. so you had better offer $20 million just to be safe.

As a side note, I have nothing against Mark Cuban and I hope he doesn't mind this post (I am sure there's a small chance he'll be on IceRocket reading it). I don't know him personally and I found his address via the Dallas Central Appraisal District. I enjoy his blog. While I don't agree with everything he does or says, I do think his views on the Internet and the future of video are pretty thought provoking. I don't care about the Mavs or the NBA so I don't really have a view on his antics in that arena. In the fiduciary category Mark has obviously been a great steward of his own capital. A lot of guys drank the kool-aid during the tech bubble. He, on the other hand, made his money and then got diversified. He held on to a lot more of his fortune than most people as a result. He gets an Armchair Fiduciary gold star for that.

1 comment:

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