A lot of angst is caused by computer generated estimates of home values. Most buyers realize that “auto comps” are seriously flawed. Some sellers worry a great deal about the impact that one of these sites might have on their home’s chances of selling at a fair price.
What is the difficulty with these sites (such as Zillow)? Why are they unreliable?
Real estate professionals know that a great many area-related things can impact home values, such as school districts, city boundaries, zip codes, or even being on one side or another of a somewhat main road. Most often, the computer generated estimations of value do not factor these things in.
Additionally, these automated systems rely on county records, which are often incorrect. They don’t “see” remodels, they don’t “compute” deferred maintenance! They cannot factor in a view – good or bad.
To ascertain a home’s probable market value, it’s best to find recently sold homes (pendings and closed sales) that are related to the subject property as follows: within a mile, within 10-15% of the size of the home, similar lot size, similar age, similar condition, and close proximity of time (preferably within the last couple of months). Additionally, the “comps” should be in the same school district and have the same city or town name and have the same zip code.
Many things can “throw” value: odors in the home, high voltage power lines, an overcrowded or unkempt street, noisy neighbors & dogs which bark too much, having apartments too close, being adjacent to freeway walls, train tracks etc.
If you view these types of market analysis sites online and get a “value” provided, please remember that these sites are extremely limited. Please understand that the number you see could be far higher or lower than market value. It is not uncommon, in my experience, to have them off as much as 20%.
What’s the solution? If you read these online valuations, do so with a large “grain of salt”. A better approach is to contact your Realtor and ask for recent comps and if you need to know the precise valuation, ask for that. Your real estate professional can help you to get a handle on your home’s current value, whether it’s to petition for lower property taxes or to decide if you can refinance or sell.
