The number one question people want answered in real estate is “what’s my house worth?”. The answer, “that depends”.
The current trend online is to attract viewers with online and automatic valuation tools. “Click here to learn the value of your home”. Surrender your email address and then prepare to get dripped (marketing jargon for emailed, texted, called on a regular basis until you purchase or threaten death to the caller). These tools offered by Zillow, REMAX and many other providers are simple lead generation schemes. Here’s why.
Markets are local. A two story home in one part of town on a busy street might look similar to the same age, style and size as another but place this home in a “better” part of town on a quiet street and the price will be dramatically different. Minor differences in location can mean a lot.
Statistics are History. Current transactions between buyers and sellers happen fast and only become statistics 30 to 45 days later. The average first time buyer writes 2 to 3 offer before they acquire a home. This could happen in a matter of days. Following statistics, which are used by online systems for valuations, are no help to buyers who are in the hunt. Buyer’s who are activity looking at houses understand pricing better. Therefore, online valuation tools can easily be 30 to 45 days out of date which is a long time for buyers.
Tax Assessments are Wrong. The assessment authority will admit, “we don’t ever see the inside of the homes we are assessing”. When tax assessments are low, homeowners rarely complain because it means lower taxes. When the assessment is perceived to be high, homeowners fight them! Or, they sell! Tax assessments are not to be relied upon.
Buying is largely emotional. Smart buyers view multiple homes, learn pricing differences between features, areas, style and age. However, when a buyer walks into “their” new home, the choice is often automatic and partly emotional. Statistics cannot capture “feel”.
3 Methods to Truly Value Your Home. There are three accepted methods in the industry for the proper valuation of real estate. Each method will also have derivatives. Cost Method – what would it cost to buy the lot and replace the home in today’s construction dollars. Income Method – the value of the property if it was rented out and generating income for the owner/investor. Comparative Market Assessment – Comparing the subject property to local sales of similar homes against houses currently listed properties for sale.
Online tools are fun. Simple as that. The most important question is “why do you need to know the value?”. Are you selling, borrowing money or just want to update your financials?
A competent realtor who knows your area should be able to advise you and with the added bonus of no harassment! Valueations are often performed free! After all, what’s your time worth?