ACCURATE HOME VALUE: PERSPECTIVE OR TRUTH
ON LINE HOME VALUE: Perception versus Reality
We have recently heard that many property owners are receiving updates on the value of their homes from insurance companies, mortgage companies or on line listing aggregators such as Zillow. A few of the estimates being received are accurate, but the majority of the values are not.
An agent or broker should review the market they serve on an going basis to track trends and make sure that they are compiling accurate home value information for their clients. After receiving reports ranging from panic that an owner has received a report their home has dropped in value thousands of dollars in one month to joy of their home increasing by thousands of dollars in one month, I felt compelled to bring to light why these values in many areas are not accurate.
The most glaring recent example is a home that we had listed for an REO company that was in poor condition and priced at $9,000.00. A popular listing aggregator posted the home with a value of $2,000.000.00. The reason for such a glaring inaccuracy of data is the property was in a proximity close to the lake. The listing aggregator computer using data pulling from the geographic area and not making proper adjustments for condition, square footage, age of the home, etc. derived at an attractive but inaccurate value.
The home value estimates received from insurance companies, mortgage companies or listing aggregators such as Zillow are based on limited information of an area that is gleaned from computer data base based on a geographic area and plugged into a template for the computer to give the owner a range of value which is then averaged to give them a “current home value”.
In some areas such computer driven estimates are very accurate; in other areas, that is not the case and only gives a broad perception of value. Be sure you know the difference in a TRUE HOME VALUE VS A PERCIEVED HOME VALUE.
True home value can best be derived by a licensed appraiser or a licensed real estate agent or broker accessing current and accurate sold properties and making adjustments to reflect your home’s amenities. Other factors of impact that will be factored in are the area’s key real estate numbers and economic impact .
Perceived Home Value is big data pulled geographically by a computer program that averages these sales. A computer generated report without professional human interface does not know the local area, verify the accuracy of the information source or make adjustments for the amenities in your home. It also does not know historical numbers or local economic impact on current or future values.
A few of the reasons for the difference in accuracy of a true home value and a perceived home value are:
- The source of closed properties from which a system is pulling to compare to a specific home must contain accurate data. In many areas a system will pull from the local clerk of court or tax assessor. In many areas the local tax authority and/or clerk of courts do not have electronic feeds of closed sales data to electronically feed to outside sources.
2.The lack of a skilled real estate agent or broker to accurately select closed/sold properties that are a close match to the home they are valuing.
3. The ability of a computer generated value to have the knowledge of area real estate statistics that impact the
pricing of a home to include days on the market, absorption rate, list to sales value and area economic
conditions. Al of these key factors change on a daily to monthly basis and have major impact on the worth of a
Always make decisions on the true value of your home by consulting an appraiser or local real estate agent or broker. Your investment is too great to rely on a random computer average to determine the value of your home.