Mostly whimsical reflections on life
Sometimes gimmicky books with clever titles turn out to be big bores. Zillow Talk: The New Rules of Real Estate may prove an exception.
Written by Zillow CEO Spencer Rascoff and Chief Economist Stan Humphries, the book debunks hallowed real estate myths and challenges sacred cows. For example, the book calls the mortgage interest deduction a faux populist idea that really benefits well-off homeowners. They also say for some people it is smarter to rent than buy.
At its core, Zillow Talk is a clever marketing ploy, intended to attract attention to Zillow’s online real estate services. But that doesn’t detract from the book’s content, which includes practical advice that runs counter to common belief. Or as the book’s promotional ad clucks, “Packed with data-driven insights about buying, selling, renting and financing real estate and invaluable how-to advice, Zillow Talk is poised to be the real estate almanac for the next generation.”
In the book, Rascoff and Humphries say it is generally a bad idea to buy the worst house in the best neighborhood because potential buyers will always drive by and point to it as the worst house in the neighborhood. A better idea, they say, is to look for the worst house in the “hottest” neighborhood.
They also say you would be smarter to spruce up a bathroom rather than remodel a kitchen. Even a modest bathroom remodel will deliver more resale value that a redone kitchen. “Kitchen renovations, at any level, offer among the lowest return on investment of the home improvements we studied,” the authors claim based on their knowledge of home valuations.
The optimal time to list a house for sale is late March so it has a chance to rise in search listings before the spring, when we all thought people bought new homes. The sweet spot for listing a house, they say, is after NCAA basketball’s March Madness, but before the PGA’s Master’s Tournament.
Getting a bargain on a foreclosure sale may be a matter of comparing apples and apricots. Rascoff and Humphries say the bottom line shows the national average discount on a foreclosure sale is 4.7 percent, not quite the bargain buyers imagine.
Homeownership is the heart and hearth of the American dream. However, the authors say owning a home in a lower income neighborhood may not be such a great investment. Owners in those neighborhoods realize less appreciation, but experience more volatility – usually big neon signs to invest your money somewhere else.
The biggest punch in the gut involves Zillow Talk’s assessment that the $100 billion tax expenditure for the mortgage interest deduction is secretly (or maybe not so secretly) a boon for big guys, not little guys. “It’s especially ironic,” according to Rascoff and Humphries, “that the mortgage interest deduction is consistently sold to the American people as a populist policy to help the little guy. In reality, it’s the exact opposite.”
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