Among third-party websites, the most popular are Realtor.com, Zillow and Trulia. You can use these websites to search for rentals, find homes for sale, to blog and obtain a free estimate of the value of your home.
Even if you have no plans to buy or sell a home, you’ve probably peeked at the value your home or a neighbor’s home.
I confess, I look at the estimated value of my own home on third-party websites. I also review the estimated value of my clients ‘homes on third-party websites so that I will be informed about the estimated value of my listings published on the Internet by the various websites. Frankly, the listed price rarely matches the estimated price.
The Realtors’ job becomes more challenging when the estimated value is significantly less than the real market value. Some buyers expect the agent to justify the listed price if it varies much above the estimated value. (Of course, buyers never complain when the estimated value is higher than the listed price!)
The data shows that 98 percent of homebuyers begin their search for a home on the Internet. Most people like the third-party real estate websites, which offer free information and estimated home values.
Although the Internet puts a world of information at your fingertips, there is also a lot of misleading information, inaccurate information, omitted information and even outright fraud on the Internet.
Only a tool
An estimated home value is created by an algorithm that collects data from public records, Realtors and multiple-listing associations and combines it with information about market trends. The information is impersonal and frequently incomplete.
For example, estimated values work best in neighborhoods where there is a lot of turnover. The high-turnover neighborhoods (less popular, prompting more sales) would have more accurate estimated values because of the high volume of sales, while the low-turnover neighborhoods (more popular, so residents don’t sell as often) would have estimated values that are far less accurate, because there are fewer sales to establish a trend in value.
An estimate is just that, an estimate. A computer-generated estimate of value cannot account for a new gourmet kitchen or a spectacular view. Estimated values cannot accurately assess consumer preferences for two-story homes vs. mid-entry homes.
Estimated values have no way to measure curb appeal or the emotions of a buyer. An estimate of value is merely a tool, and not a very valuable tool for determining the value of a home. Some third-party websites even allow the homeowner to modify the information and the value of their home, ignoring the computer-generated value.
According to a recent study, the Millennial generation (those younger than 40) trust referrals and recommendations by strangers on websites such as Yelp more than they trust referrals from family or friends. I don’t know about you, but my parents taught me to never take candy from strangers.
While it’s perfectly reasonable to research products and read reviews of restaurants and businesses, I would never trust an anonymous review from a perfect stranger above the advice of family and friends. A glowing restaurant review could have been placed there by the owner of the restaurant. Likewise, a negative review might have been submitted by a disgruntled restaurant employee. There is no way to verify much of the information on the Internet. Hence, caveat emptor, or “Let the buyer beware.”
The Internet is a great tool. You can use the Internet to find the lowest price for a 46-inch Panasonic television — because they are all identical.
Homes are different: No two homes are alike, ever. At best, third-party real estate websites provide a general indication of real estate values, but they should not be considered a reliable method of determining the precise value of real estate in most instances. The problem arises when a buyer trusts a computer-generated estimate of value over other evidence of value.
Know the true value
Have you looked up the value of your home on a third-party real estate website? How accurate was the estimated value? If you bought or sold a house recently, how did the estimated value compare to the actual sale price?
Most people realize that estimated home values are not always in-synch with market values. I don’t believe a low estimated value will be a serious problem at the time you sell.
I advise my clients, the value of a free estimated home value is worth what it cost you: zero. For the most accurate property valuation, contact a Realtor. Determining value is what we do for a living.
RAY AKERS has been a licensed Realtor for more than 25 years and is a lifelong Seattle resident. Send your questions to firstname.lastname@example.org or call (206) 722-4444.