What's Your Home Worth?

The Truth About Automated Real Estate Valuations

What's Your Home Worth?

A phenomenon that has become extremely popular in recent years is the Automated Home Valuation feature that can be found on many websites. It’s hardly surprising. Let’s assume you live in Danville and you are wondering how much equity you have in your home. Why wouldn’t you prefer to just go to a website and enter the address of your home to get an instant valuation?

Can You Really Get An Accurate Home Valuation That Easily?

Unfortunately, the old adage, “if it sounds too good to be true, then it probably isn’t” applies here, as in many cases. Not that an Automated Home Valuation (AVM) is necessarily worthless, but you do need to take a variety of factors into consideration if you are planning to use it for anything more than entertainment.

First of all, consider how it works. In almost every case, the approach is to pull recent sales figures of homes of similar size and age to your home from the public record, then average the sale price per square foot to arrive at a likely valuation per square foot for your home. Simply multiplying by the number of square feet in your home produces the AVM, although in practice, a price range of plus or minus 5% is generally given to cover any margin of error.

Isn’t That Exactly What An Appraiser Or A Realtor Does To Arrive At A Home Valuation?

Well not exactly. The approach is certainly similar but there are some critical differences:

When the Realtor or appraiser is carrying out a home valuation, they consider homes –

  • In the same neighborhood where possible. Blackhawk and Shadow Creek are right next to each other but their homes sell in different markets.
  • Feeding into the same schools. Some schools are much more desirable than others and this is reflected in home prices.
  • With the same number of bedrooms. A 4-bedroom home will generally sell for more than a 3-bedroom one of similar size.
  • With similar amenities (yard size, garage spaces etc.). Plus some pools add value and some don’t depending on condition and location.
  • With similar upgrades and improvements. Buyers will fall in love with your Danville home if it has a chef’s kitchen with Viking appliances.

Realtors and appraisers also take into consideration whether we are in a rising or declining market.

An AVM can’t consider any of this because it can’t access this data. You can see what Zillow says about the accuracy of its own AVM here. Zillow is probably the best known off all AVMs.

Also note that the appraiser and the Realtor will often arrive at different figures. The appraiser takes an unemotional look at your home exactly as he sees it, while the Realtor’s approach is to consider how much appeal he or she can create when the home is prepared and marketed appropriately, sometimes taking into consideration any improvements the home owner is willing to carry out.

How Easy Is It To Get A Valuation That Means Something Without Paying For An Appraisal?

It really is very simple. If you send me an email with your address or just go to my Free Home Valuation Page on this website, you will see that there are a number of options. You really don’t even need to talk to me if you don’t want to. I promise I won’t try to talk you into listing your home for sale with me but I will always be here to provide you with any help and advice that I can.

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