I wanted to comment on on-line home valuation sites (such as Zillow, Redfin, Realtor.com, and many others) and their reliability when thinking about the value of your home or a home you are considering purchasing. Sometimes, my own detailed analysis of the market value of a home (which is based upon my comprehensive consideration of recent comparables sales and the strength or weakness of sales activity in that particular market) will not align with a value generated by one of the many on-line valuation tools.
In one instance, a prospective Seller bristled at my recommendation for pricing their home, stating that one of the on-line valuation sites gave her home a valuation substantially higher than what I suggested. She was reluctant to believe my analysis as a result. When I plugged the home’s address into several different on-line valuation sites, I saw the value cited by the Seller to justify a higher price for her home. But I also saw other sites had valued it substantially lower than my suggestion and still others were somewhere in between. I ran my own home’s address through several of these tools and my results showed a swing of nearly $300,000 from high to low among the various sites.
Of course, a Seller would be tempted to give credence to the high valuations and discredit the lower ones, while a Buyer would take the exact opposite view.
So, can any one of these tools be relied upon? Since none of the folks who prepared the algorithms that come up with a value for your home actually visited your home and assessed your home’s condition and amenities as they compare to other sales in the neighborhood, I think complete reliance on these valuation tools alone is risky. While they can be interesting anecdotal data points, I strongly believe that they cannot replace a comprehensive, detailed analysis of YOUR specific home and all its pluses and minuses in YOUR specific market.
Even Zillow recognizes the limitation of their “Zestimate” tool. By their own admission, “Zestimates” are “within 5 percent of the sale price 53.9 percent of time, within 10 percent 75.6 percent of the time and within 20% percent 89.7 percent of time.”** On a $500,000 home, missing the mark by 20% means pricing either $100,000 too high or too low. Either leaving money on the table by under valuing the home, or leaving the home to languish on the market for a long time because it is over priced.
If you are curious about what YOUR home might be worth in today’s market, send me a message and I can pull together some local market data and recent sales information for you.
**SOURCE: Washington Post, 5/13/17