As an agent who works with prospective buyer and sellers regularly, I get this question a lot!
And it’s my job to provide you with a detailed analysis of the home market value based on a comprehensive consideration of recent comparable sales, the relative strength or weakness of the marketplace, and the particular condition of the property.
But as online automated home valuation (AHV) sites like Zillow, Redfin, Realtor.com, and many others, become increasingly popular, I have found many homeowners are being misled by these assessment tools despite their questionable reliability.
AHV providers, openly acknowledge pricing errors. For example, Zilllow’s states that it’s “Zestimates” are “within 5 percent of the sales price 53.9 percent of the time, within 10 percent 75.6 percent of the time, and within 20 percent 89.7 percent of the time. “
So, roughly one-quarter of the time, the Zillow estimate is off by 10 percent or more! And wrong by 20 percent or more – more than 10 percent of the time. On a $500,000 dollar property, missing the mark by 20% means pricing either $100,000 too high or too low! Resulting in an undervaluation of the home and leaving money on the table, or leaving the home to languish on the market for a long time because it is overpriced.
Even among the online AHV sites, there are significant discrepancies. I ran my own home address through several of these tools and found that the home valuations provided showed a swing of nearly $300,000 from high to low among the various sites.
Inevitably, 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, are any of these tools reliable?? Well, since none of the people who created these AHV algorithms actually visit your home and assess your home’s unique features, I think complete reliance on these valuation tools alone is risky.
Click here if you’re curious about your home’s value! I strongly believe you cannot replace a comprehensive and detailed analysis of your specific property, which I can provide to you.
** SOURCE: Washington Post, 5/13/17