There’s nothing more exciting than getting an
email from Zillow letting you know that the value of your home has increased.
The site’s “Zestimate” feature, which is their version of an online home
appraisal calculator, is becoming the go-to source for determining the value of
a property. It typically includes previous sales of the property, similar
comparable homes that have sold in the area and a trending report estimating
how the property may increase or decrease over time.
In fact, the online home appraisal calculator
has become so popular that many websites offer it and use it as a way to
generate leads. In exchange for your estimate, you may have to provide them
with your contact information or agree to be contacted by a real estate agent.
Once you do, you may be inundated with emails and phone calls before you are
actually ready to sell or purchase a home.
In addition to generating countless unwanted
emails and phone calls, the online home appraisal calculators have been known
to provide false expectations when it comes to knowing the actual value of a
3 reasons why the online calculators don’t accurately predict the real value of
- Calculators can’t see the details and the details
matter a lot. Sure, computers are better
calculators than most of us will ever be. However, there is value in
having an estimate prepared and delivered by someone who is able to see
the details, improvements and potential flaws and defects in a property.
That online home estimator doesn’t know the wallpaper in the dining room
is a true eyesore from the 70s. It doesn’t know if the current owner’s
“kitchen renovation” was performed by a licensed contractor rather than
someone who is an occasional “DIY-er” with minimal knowledge of how to
install countertops properly. Real estate appraisers are able to see these
details and they should be taken into consideration when calculating
- There’s no way to know what you’re being graded on. Home estimate calculators all work differently and they are all
using different criteria to make their calculations. Many times, the
criteria they are using for these estimates are confidential and
proprietary. There’s no way to determine where the data is coming from and
that’s one reason why there can be differences in property values. How do
you know if the calculator is taking the fully finished and
air-conditioned basement into consideration when it comes to square
footage? Is it adding the pool you installed two summers ago into its
calculations? With a lot of these tools, there is no way to tell – and if
there is, it is difficult to alter this information.
- Have you noticed that estimates almost never match
up with other calculators? That brings us to this point: the estimates rarely seem to line up
with other online estimating calculators. Do a quick search for your home
value on the top four online estimating tools and you’ll notice they
aren’t the same. This leaves buyers and sellers in a difficult position.
Should they go with a lower estimate and possibly leave money on the table
or should they go with the higher number and make more money? While the
latter is always tempting – it’s hard to know for sure and it may result
in properties sitting on the market for several months because their
listing prices are set too high.
Despite their flaws and inconsistencies,
online home value calculators can be a good starting point when it comes to
beginning your research on the value of a property. Since they typically provide similar property
sales in the area as well as information on square footage, it can be used as a
rough estimate for property valuation. However, they should never be considered
exact when it comes to the value of a home one is looking to purchase or sell.
Only a licenced and experienced real estate appraiser will be able to determine
the true value of a piece of property.