There are sites all over the web that offer to tell you what your home is worth. Simply plug in your address and email, and you’ll get a value. It’s fast; it’s easy. But is it accurate?
The value is determined by what is called an Automated Valuation Model that analyzes public record data with computer decision logic. Square footage, age, number of bedrooms and location are easily definable objective data. The challenge is identifying, measuring and comparing the subjective data.
Automated Valuation Models or AVMs cannot identify how unique features might add or detract from the value, if the market is declining, or why the comparable sales apply or don’t apply to the subject property. Is a home worth more because it is near shopping or less because it is across the street from a high-traffic commercially zoned property?
Zillow’s Zestimate is probably the most popular AVM. “CBS This Morning” co-host Norah O’Donnell recently aired a story on the inaccuracies of the Zestimate. Read about it here in the Los Angeles Times. Zillow does acknowledge that its Zestimate is more accurate in some cities than it is in others. Zillow rates San Diego as having a “best Zestimate” rating, but this “best” status means that only 40 percent of homes have a Zestimate that comes within 5 percent of their selling prices. The other 60 percent of homes sell even farther from Zillow’s Zestimate value. That’s not very accurate, and that’s about as good as it gets.
Experienced professionals are more likely to make proper adjustments for condition, market appeal, and positive and negative influences.
Imagine that you’re going out for dinner and you consult HamburgerAVM.com to tell you how much a hamburger is worth. It might be accurate based on condiments, vegetables and weight, but can it address things like taste, quality, cleanliness, service, convenience or atmosphere? You certainly couldn’t present the printout to the waiter to negotiate a lower price.
An AVM can be a tool that a homeowner, prospective buyer, mortgage officer, appraiser or real estate agent can use to get a quick idea of price, but there are inherent limitations that can only be considered by personal examination balanced with experience in the market place.
Experience and understanding of the subject property and the marketplace are critical to having confidence that a value is accurate. Any person could go through the same steps to arrive at a value, but an experienced, well-trained professional is far more likely to assess all of the variables more accurately. If you’d like an accurate estimate of your home’s value from an experienced professional, contact me. I’d be happy to get one to you.