case study for Zillow and others as has been discussed here on the forum Speedy Gonzales.

In my opinion Zillow is nice to gather data get a general feel of value and rental price… To use zillow as your value vehicle like its true market value will lead to one either missing a great deal or paying too much as the data just is not very accurate.. One really needs to either get a few BPO's from local RE brokers or 3rd party apprasials to really settle on value.
I personally never use zillow I will always go to the Multiple listing service. I like Zillow and still use it .When you work in a certain area you should know the numbers. Zillow is not super accurate but can give you a rough estimate.  Trulia is very similar site.

That said here is an example of 3 transactions I just did in Henry County GA, the play ground we work in in the Atlanta market by and large.

Some of you may know what a 1031 tax deffered exhange is vis a vi the US tax code this allows sellers of non owner occuppied properties to roll up thier equity and replace one asset for another without paying a capital gain tax at the time of transfer.. Many investors have 1031 ed from one property to another for many years often time starting with a little 4 plex in La and ending up own 200 units in Oaklahoma city that kind of thing.

NOw there is also the 1033 exchange… This is an exhcange that is allowed when your property that you have was purchased in a 1031 and now you have an involentary sale of it.  Involentary you ask. Its also called a reverse exchange as well.

1. condemnation   gov decides to put a freeway through your poperty and your forced to sell.

2. Invested with Large company as a tenant in common and the operator went Bankrupt like a REIT and other larger offerings on usually large commercial projects and office space… So alot of that going on in the states right now right.

So you have folks that end up getting maybe 50 cents on the dollar if they are lucky.. And since they 1031 into the property they have recapture and tax due. with this tax it can just wipe out the rest of their cash.

In comes the 1033.. These investors can roll into another property through the 1033.   They have to transfer whatever cash is avaliable however they also have to take on the same pro rata amount of 3rd party debt as when they bought the investment they are transfering out of.

So now you have an investor needing to buy a property and has some cash but also needs debt.  We are in the worse environment in for ever for commercial loans. Many of these investors cannot qualify for a new loan.

here is what we offer and have done and this will lead back to why Zillow can be a red herring in valuing property.

We take that same investor and we provide both things that they need… Property to replace cash down and WE CARRY THE DEBT with no credit check or qualfying.

Example.

House:

One of our normal Henry county propertys all in super prop… 60k… rents for 1000…. You all know about those.

We sell it to the 1033 investor for 120k…. 60k down we take back a 60k first deed of trust or Mortgage as you know them.
No payments interests accrued at the minimum statory rate as to not created imputed interest for ourselves.

We bring it into the Truewholeshouses.com model which is the investor just gets their 9% cash on cash and have no down side… they are the bank never miss a payment never have a cash call for maintenance etc.

OK so know your wonder about this house selling for 120k……

We when we sell this house lets say it sells for 100k in 5 years.  We can legally take a short sale just like banks are doing today remember we are the Mortgage holder and in this case our client owns the house just like any other investor buying houses. So we just structure this exactly like our TWH model which is 9% cash on cash and 50% equity share.

We do a triple net lease with the new owner so they have no costs during ownership. so they have made thier 9% all along…

We take a short payoff instead of 60k… We take our half of the 40k profit which is 20k and the investor gets 20k profit. So we forgave 40k of our deed of trust which just like any bank we have the right to do…IE short sale selling for less than the mortgage or debt on the property.

The investor gets out of a jam on their 1033 and actually makes a huge net return 9%  which is huge in the US by the by and really about the best you will do over time when you check your numbers over a 5 year span…. And they make a nice equity kicker.

So moral of this story is

1. Zillow and all the other sites are going to show this house as a 120k comp. and I have done 3 in January like this and will probably do another 30 or 40 this year for this one particular investment class thats rolling out of a multi billion dollar bankruptcy and needs to 1033 to save their money… Largest bankruptcy in Oregon History company called Sunwest.

so there you have it and there are many others that drop sales on to the public records for all different purchase prices… Is this arms length HECK NO… Is this a custom plan created by a team of experinced Real Estate operators HECK YES> and approved by the buyer and sellers accountants an attorneys and the paper work would kill a tree….

So there you have it just one example why zillow and other sites should just be a base line and not taken like Gospel.

Then as Speedy Gonzales mentioned you have non disclosure states. And in those states its truely Caveot Emptar…

JLH

One last thing this is a strategy we used in CA for values as well… Values in CA are picked up if they are not on MLS for the transfer tax stamp duty… One could buy more stamps if they liked too,,, no law about buying enough stamps to show a value far over what you actually paid for it.  big developers did this all the time.

[/quote]Nothing else to say since I like Jays system and incorporating that into our system in Charlotte NC

Alex