Who hasn’t checked out real estate sites for price estimates of their own home, a neighbor’s home, or even a beach house when on vacation? Most of us are guilty as charged.
It’s easy to see why these sites and apps are tempting. First of all, it’s fun. But more practically, buyers and sellers often use these sites to get information on the current market.
However, the estimates you see online are not as accurate or consistent as you think. An online estimate shouldn’t be your only resource for pricing a home.
How Do These Websites Work?
When you search, “What is my home worth?” you’ll find links like “free price estimator” at the top of your google search. Bear in mind the first few links are almost always paid advertisements. You can use these tools to see what any home is “worth,” but take that estimate with a HUGE grain of salt.
Here’s why these websites can’t give you an accurate estimate:
- These estimates are calculated using public data (and sometimes user-submitted feedback or corrections). They don’t conduct a physical inspection of a home, so inaccuracies in the public records can’t be corrected on the spot. For example, square footage from tax records is notoriously incorrect (which is a huge factor in an online assessment of your home). Accordingly, any additions, renovations, or upgrades to your home are likely ignored in this valuation.
- Artificial intelligence hasn’t replaced the human brain (not yet, at least). Websites calculate the value of your home based on what a computer tells them, not a person. Online calculations utilize an algorithm that can only use quantifiable data and not anything subjective – like the quality or appeal of a home. It can’t “systematically gather and verify” the value of a backyard great for entertaining, new granite countertops, or an open-concept living space.
Computers are helpful for so many things, but they lack the ability to pick up the nuisances that really change the value of a home. When it comes to accurate pricing, human insight wins over the data cruncher.
What’s Wrong With the System?
Computer-generated assessments are missing a key factor. They don’t have direct knowledge about the local market and your particular neighborhood. Certain neighborhoods can be hot and in demand, but just a few blocks away, house prices start to drop.
An online estimate can’t differentiate neighborhoods as much as you’d expect. They use data from an area much more extensive than your neighborhood. Often, they use sales data from an entire county to extrapolate changes in the housing market.
It’s best to have a professional physically go to your home and analyze the neighborhood and quality of your home.
What is your Home Really Worth?
When selling your home, refinancing, or negotiating property taxes, don’t put too much weight on the number you find online.
That’s why you shouldn’t insist your home be priced to match your favorite online estimate. You could wind up overpricing your home and watching it sit on the market for months without any interested buyers.
It’s totally fun to check out online estimate sites if you’re curious. I’m not here to rain on your parade. However, please don’t depend on them when the time comes to price your home for sale. If you want to know what your home is worth (even if you aren’t selling anytime soon), call me. I can schedule a quick walk-through of your home and provide a more accurate number.
I'm Lauren Haug! I'm a teacher-turned-real estate agent, and I teach people how to build wealth through real estate in Northern Colorado.
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