Friday, July 31, 2015

Homequant Offers Free AVM for Assessment and Mortgage

Thursday, July 30, 2015

Most Viewed Blog Posts / Social Campaigns - June 2015

Homequant Announces Launch of 30-Second HomeValu(tm)

How much does a typical 2,000 SF home in Park Slope (Brooklyn) cost? Homequant configures.

How much does a typical 2,000 SF home in DC West (Zip 20016) cost? Homequant configures.

How much does a typical 2,000 SF home in Newport Beach, CA cost? Homequant configures.

How much does a typical 2,500 SF home in Garden City (LI) cost? Homequant configures.

Chicago, IL - Home Sales Analysis by Town Analyst

Is Charlotte Housing Market More Affordable than Dallas, Minneapolis and Portland Markets?

Is LA Housing Market More Affordable than Brooklyn, Chicago and Philadelphia Markets?

Miami Housing Market Back on Linear Growth Path

Why Tax Appeals Consultants MUST Use AVM - Upfront - to Validate Values on Tax Roll


What is the Location Value of Brooklyn Heights, NY? LocValu demonstrates.

What is the Location Value of Miami Beach, FL? LocValu demonstrates.

Static Pool Service for Banks and Mortgage Companies

Pivot Table and OLAP Services

Custom Sales Statistics and AVM Services

Sales Ratio Studies for Taxing Jurisdictions

Most Viewed Blog Posts - May 2015

Most Viewed Blog Posts - April 2015

Most Viewed Blog Posts - Q1-2015

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Sunday, July 26, 2015

How AVM Helps Improve Portfolio and Assessment Performance

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When a Market AVM is developed using the recent arms-length sales, it generates an econometric solution (bottom graph).

As the model gets further fine-tuned (not shown here), the r-squared tends to approach .90, COD/COV falling below 10, at which point it can be applied on to dated mortgage portfolios / prior assessment rolls in order to have them re-priced / re-assessed in line with the market. 

To learn more about Market AVM, please contact us for our trend-setting books on AVM at: 

Thursday, July 23, 2015

Home Buyers MUST Validate Home Values at Self-directed Sites.

Updated 02-23-2016 

Instead of either accepting some model-driven estimates from online brokerage sites (we all know those estimates are not explainable) or blindly relying on salespeople's comps, prospective homebuyers MUST do their own validations at Self-directed Sites. A Self-directed Site will allow users to go through the valuation process in a step-by-step manner via the following FOUR steps:

1. Defining the Subject:  Subject property data from Public Records is often unreliable. As a homeowner, you know your home better than any such records. In Self-directed Sites, you can define/enter your own home data, without being forced to accept the data from Public Records. Here is an example of the basic subject data that you would be entering into a Self-directed system...

  (ONE Click on the image to enlarge)

2. Selecting Comps:  A list of sales - by default - does not become comps; nor do some cute model-derived estimates provide true home values. Comps - however close they are to the subject - require proper selection and adjustments. In a Self-directed Site you will get to enter your own comp selection and adjustment criteria. Here is an example...

3. Ensuring Proper Location:  The concept of Spatial comps (picking comps right off the map) is always a better way as it helps avoid picking comps from the "other side of the freeway" which could be a pricier economic neighborhood, thus inflating the value of your subject. Here is an example...

4. Understanding Final Value:  A statistically significant range, say 25th to 75th percentile, is a more meaningful way to understand comps-based subject valuation than one unique parameter.  Here is an example...

You may try out your subjects at the Homequant site. It is absolutely free and requires no registration whatsoever... 

Home Buyers MUST Verify Appraisers' Values in Four Easy Steps.

Updated 02-23-2016

Step 1 - Verify Subject Info

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Subject Info is often inaccurate in Public Records so verify it. For example, our subject property - a single family home - is located in N. Las Vegas, with 1,400 SF building area, 30 years old and sits on a 7,000 SF lot.

Step 2 - Verify Comps Criteria

Sales must be properly selected and adjusted to become comps. In this example, sales within one mile radius and 20% of the Subject's physical attributes (Land, Bldg and Age) are considered to be comps. Also, all comps are adjusted for time (sale dates) at 1% growth per month and are projected out to 12-31-2014 (a tentative purchase date). Therefore, the Subject will be valued as of that date.

To converge all Comps to the Subject's physical attributes, they are adjusted at $10 per Land SF, $100 per Bldg SF and $1,000 per Year of Depreciation. If the subject is located in a pricy neighborhood, increase the adjustments as appropriate.

Step 3 - Verify Final Comps

From a pool of ten Comps - based on the selection criteria set forth - five most recent ones are chosen. Closest distance and least adjustment are the two other selection methods. Before finalizing, always take a look at them spatially (on the map), as the comps from the "other side of a major artery/freeway could be inappropriate." Here are the comps spatially:

Step 4 - Verify Valuation

The final five are producing the subject valuation. While the Median Adjusted Sale Price (ASP) is the most probable value for this subject, 25th to 75th Percentile range is the most probable range. Alternatively, an investor may consider up to the 25th Percentile, while someone bent on outbidding the competition to acquire the property could start above the 75th Percentile. It is therefore quite relative. 

Now, try out your own subjects at our Homequant site. It is absolutely free and requires no registration whatsoever... 

Home Buyers MUST Use Five Best Comps to Value a Subject.

Updated 02-23-2016

In this example, the subject (a single family home) is located in Orlando, with the following attributes: 15 year old and 1,500 SF of bldg area on a 6,000 SF lot. 

Let's search for ten best comparable sales ("comps") within 1 mile radius of the town, but constraining all three variables - Land, Bldg and Age - to 20% range and time adjusting all incoming sales at 6% annual (.5% per month) growth:

(Click on the image to enhance)

Five best comps based on closest distance are now chosen from the pool of ten comps:
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Let's take a Spatial look into the comps pool as well as the final five (green ones):

(Click on the image to enlarge)

Now, let's take a look at the Comps Grid to understand how to interpret the final value. While the most Probable Value is the Median Adjusted Sale Price (ASP), the 25th to 75th Percentile Range is the most Probable Value Range for a potential home buyer, although an aggressive investor might consider a lower value range, say up to the 25th Percentile, while a buyer bent on outbidding the competition might consider a more lax value range, say above the 75th Percentile.

(Click on the image to enlarge)

Visit the Homequant site to learn how to value a subject using optimal selection criteria and adjustments, zeroing in on the final five, as well as the value parameters.

Three Sales from Three Prior Quarters - Unadjusted for Time of Sale - are NOT Comps.

Updated 02-23-2016

Three Sales from three prior quarters - unadjusted for time - are not comparable sales ("comps"). They must be adjusted for the time of sale. 

The following snapshot shows how to time-adjust comps at 6% GROWTH annually (.5% per mo) to arrive at the subject value as of 09-30-2015, resulting in the older comps to gain more in time value than the newer ones...

(Click on the image to enlarge)
Visit the Homequant site to learn how to use time adjusted comps to value subject properties:

Home Buyers MUST Choose Least Adjustment over Distance or Sales Recency.

Updated 02-23-2016

Of the three methods to evaluate comparable sales ("comps") - distance radius, sales recency and least adjustment - least adjustment is the most powerful method. 

Since most comps are pooled from a limited distance within the same neighborhood and older sales are generally time adjusted, distance and sales recency become less powerful methods than least adjustment which, in addition to sales time adjustment, incorporates adjustments for property features as well. 

1. Least Adjustment

(Click on the image to enlarge)

Note - while determining least adjustment, signs are ignored. Therefore, +3,000 and -3,000 are tied. In the table above, +2,940 is a smaller number than -8,510, hence being considered the best comp here requiring the least adjustment.

2. Distance Radius

3. Sales Recency

Visit the Homequant site to learn how to use these methods to value subject properties using comp sales:

Home Buyers MUST Learn to Differentiate between Sales and Comparable Sales.

Updated 02-23-2016

A list of sales - by default - does not become comparable sales ("comps"). Sales - even from the same neighborhood - must be quantitatively adjusted for characteristics and time to become comps. Once adjusted, the differences in property characteristics, distance and time (9/2014 and 9/2015 sales are not the same) become irrelevant. 

So, ask your Broker to show how the comps have been adjusted. Here is a snapshot of the adjustment process:

(Click on the image to enlarge)
Visit the Homequant site and use your comps selection and adjustment to value your own subjects:

Home Buyers MUST Demand to See the Comparable Sales, Spatially.

Updated 02-23-2016

Remember: Comparable Sales ("comps") from the other side of a major artery can be significantly pricier, thus improperly inflating the value of your subject property. So, demand to see the comps - contributing to the valuation of the subject property - Spatially!

The same idea is equally applicable for the existing homeowners planning to challenge their property tax assessment. Ask your Tax Assessor to show the comps (that contributed to your assessed value) on the map. 

Since Assessors (of larger jurisdictions) heavily depend on Automated Valuation Models (AVM), this is often a serious problem. If you see the comps on the map, you can relate to them more meaningfully. 

In the graphic below, any comps from south of Hwy-417 might be inappropriate!

Here is a snapshot of spatial comps:

(Click on the image to enlarge)
Visit the Homequant site to value your own subjects with spatial comps. It's totally self-directed (no frozen / modeled values), totally free (no strings) and requires no registration whatsoever...

Wednesday, July 22, 2015

How LocValu Helps Decipher the Contribution of Fixed Locations in Product Pricing

The LocValu Invention

The LocValu (URL invention offers market-derived fixed location values for the major markets to help consumers understand the relative differences in values brought about by virtue of variations in location alone.

Currently, LocValu’s fixed locations represent Zip Codes within a market area, though the developer is planning on adding Census Tracts, shortly, as an alternative value node. Since the LocValu portal provides a generic solution, it will be extremely useful for individuals and businesses alike.

Here is how the LocValu portal will help consumers: If Zip Code X shows a median location value of 2.56 while a contiguous Zip Code Y carries 1.32, a potential homeowner would instantly know that the location value alone could make comparable homes in X significantly pricier than those in Y. Likewise, a potential storefront renter is expected to pay a much higher rent in X than in Y, while a multi-family developer would be willing to pay a higher price for a comparable parcel of land in X than in Y – all owing to the higher value of location alone.

Since these Zip Codes have been assigned statistically significant and market-adjusted location values, consumers will more comfortably accept them as their "mutual" choice of price differentials than the heuristic or opinion-based counterparts without a scientific base.     

In terms of the potential use by consumers, the possibilities are numerous. Homebuyers can re-price comps (without having to recollect new comps from the other Zip Codes of interest); tenants can re-price rents; apartment, office and retail management companies can readjust rents; home developers can market-adjust prices; reo-to-rental companies can verify portfolio prices; loan officers can (apply these location values to generic costs) to develop “first look” values; hospitality chains can validate room rents; insurances can verify rates, to name a few.  

Navigating LocValu

Graphic One
Click on the image to enlarge

Once a user selects a market from the home page (Graphic One above), the map of the market appears, with Zip Codes highlighted in Red. By clicking on a Zip Code user can see its median location value. A range is also provided to highlight the level of diversity within the Zip Code. Contiguous or a set of Zip Code values may be viewed by opening them up simultaneously (Graphic Two below).  Alternatively, a specific Zip Code value may be sought via the Zip Code box provided.

Graphic Two

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In order to view the color-coded heat map (Graphic Three below), the Zip Code boundaries must be turned on. The navigation mechanism, however, remains the same with or without the boundaries being on.

Graphic Three

 Click on the image to enlarge

A 3D surface chart (Graphic Four below) is also provided to offer a consolidated view of the entire market, elegantly displaying the locations of the peaks, troughs, plateaus and everything in between.      

Graphic Four

Click on the image to enlarge

LocValu Advantages

Today, LocValu is the most unique location valuation system available online to help:

1.   Individuals – they can use LocValu in many different ways: from validating comparable home sale prices across Zip Codes to verifying consumer price differentials (e.g., restaurants to beauty salons to movie theaters to daycare, etc.) due to location differences, etc.. 

2.   Retail businesses – while evaluating comparable retail business locations across Zip Codes, prospective renters can use LocValu to understand the true differences in market rents due exclusively to the differences in location. Likewise, landlords can use it to test the existing and set the future rent.  
3.   Apartment complexes – apartment management companies can effectively utilize LocValu to validate internal rent levels for similar complexes located in different Zip Codes. Since LocValu is an independent source, their rent variations might be easier to justify. 

4.   Banks and Mortgages – loan officers and mortgage underwriters in local banks and mortgage companies can use LocValu to develop market-adjusted cost approach values by applying these location factors to readily available cost factors. 

5.   Insurance companies – while developing the risk scores actuarial scientists can use these location values as control parameters.          

In a nutshell, the LocValu system offers a very uniform – and statistically significant – invention that provides a generic solution to the long-standing problem of valuing fixed locations, in clear contrast to the traditional opinion-based valuations without any scientific basis.

LocValu Press Release