Big news came down the wire last week when it was announced that Zillow had acquired Trulia for $3.5 billion in stock options. While a lot of people may not see how this merger will directly impact their life, for home buyers or sellers, it’s always a good idea to understand the difference between “zestimates”—home value estimates taken from Zillow—or Automated Valuation Models (AVM) and real people.
When it comes to AVM’s, they tend to work best on “cookie cutter” homes where most of the properties look relatively similar to one another. Therefore, it should come as no surprise that very few lenders rely solely on AVM’s for loan decisions since they can’t always accurately value unique properties such as those sitting on Lake Lanier, various upscale golf courses, and homes with a great deal of acreage.
Therefore, the following is a list of things that an automated or non-appraiser valuation (such as the kind you would find on Zillow) won’t tell you. Before you consider purchasing a home based on these types of online valuations, it’s important to understand the difference.
1.) IS THE PHYSICAL HOUSE STILL STANDING WITH ACCURATE SQUARE FOOTAGE? Sites like Zillow obtain their information from courthouse and property data regarding location and square footage, which means it’s not based on an actual appraiser’s home measurement. If you’re considering a house, you’ll obviously want to know for sure that it has things like four walls and a roof; therefore, it’s not always smart to assume that a computer is the best source for up-to-date data.
2.) ARE THERE UNIQUE FEATURES WHICH MIGHT ADD OR DETRACT FROM THE PROPERTY VALUE? Sure, the computer might value a property at $300,000; however, that number might be subject to extenuating circumstances such as the train tracks just down the road or the desirable parks right outside the neighborhood.
3.) WHAT VARIABLES IMPACT COMPARABLE SALES? While a computer might compare your property to similar, recently sold property a ¼ mile away, it doesn’t mean all of the other variables are in line. The properties might be in a different school district, sit on different roads, be flood-prone, or have been sold under duress.
4.) ARE THERE MARKET FLUCTUATIONS? Since automated online systems utilize data from recent, nearby sales, they may not account for neighborhoods that are beginning to experience upturns or downturns.
5.) IS YOUR APPRAISER QUALIFIED? When you work with an appraiser, you’re generally aware of the person’s qualifications and whether they will complete your project with professionalism, solid ethics, and judgment; however, when it comes to free online services, you have no idea who is behind the values and either way, they will never compare to the work of a physical, on-site appraiser.
Marie Dinsmore, Certified Luxury Home Specialist | The Dinsmore Team | www.dinsmoreteam.com | 770-712-7789
