Home Value Estimators Accuracy
(The Ugly Truth)
Accurate Home Values are a Big Deal
Your home value is important you. We know this because our customers get so emotional about the accuracy of their home values when it comes to important life decisions.
Of course, you care about an accurate home value for various reasons:
Selling your home.
Considering another home for purchase.
Frustrated with high property taxes.
Getting the right amount of home owners insurance coverage.
Qualifying for that refinance to remodel or consolidate bills.
And for so many other reasons.
There are so many things to consider about your home value, how it can affect your lifestyle and your financial future or the future of your children and what factors can make your house value go up or down.
In this article we will talk about the inaccuracies of instant home value estimators, all of the ins and outs of accurate house valuation, things that can increase or decrease your home value, how you can use your home value to improve your life and most of all, how to get an accurate house value.
Are Instant Home Value Estimators like Zillow Accurate?
Home valuation is a huge business. That's why Zillow is one of the most visited sites online. Everyone wants to know how much their house is worth. And who doesn't love a free tool that can give you an instant answer? Simply because of the sheer size of Zillow, it has become a trusted brand.
But is it accurate? Here's an eye-opener.
Zillow Zestimate Flunks Reviews
A recent 1 star review about Zillow on Consumer Affairs website said:
"6 weeks before I listed my house FSBO my Zestimate was 219,000+ with a high range of 244k. Two days after it was listed my Zestimate was suddenly 179,000+. My home was appraised in 2011 at 200k. Many upgrades and an increase in market conditions of more than 50% to date. Checked my next door neighbor, much smaller house, older house, less beds and baths, Zestimate over 220k.
"I emailed Zillow begging them to please adjust my Zestimate, that something must be terribly wrong!. Every email was the same answer . . . saying they have no control over how values are determined and that they just had an update to the system and that's why my value was affected. DUH! Sellers BEWARE!"
If you go to the Zillow reviews on Consumer Affairs website, you'll see that almost all of the reviews are 1 star and similar in nature to the review above.
Why I'll Never Trust an Instant Home Value Estimator Again
A $50,000 difference in value from one week to the next can't be reliable. And that's nothing compared to what happened when I recently used various instant home value estimators to see how close they could come to an appraisal and a Realtor's comps report I just had done on my own home.
The accurate value of my home was about $500,000 as confirmed by the appraisal and Realtor Comps Report I recently had done for a refi-cash-out remodel of my home:
$514,651 - Realtor's CMA Comps Report before Appraisal
$500,000 - Actual Value Confirmed by Appraisal
But look at how the instant home value estimators I tried showed my value much higher than it actually was, some as much as $200,000 off!
Automated Home Value Estimation Sites
$606,483 - Zillow Zestimate - $106,483 Off
$682,000 - Chase Home Value Estimator - $182,000 Off
$588,078 - ForSaleByOwner Pricing Scout - $88,078 Off
$622,000 - Eppraisal.com - $122,000 Off
$606,259 - Trulia Estimate - $106,259 Off
$700,000 - Realtor.com - $200,000 Off
$718,000 - Remax Home Estimate - $218,000 Off
The Ugly Truth About Instant Home Value Estimators
The truth about instant home value estimators is that their all too common inaccuracies can have disastrous effects on your financial life.
In my case, I was trying to qualify for a refi. If I had gone with these kinds of values when I applied, expecting to get another $200k in cash out, my house would never would have appraised for $700k and I would not have qualified.
That may not have ruined my life, but what a mess.
On the other hand, if you were trying to buy or sell a house, a $200,000 margin of error could mean overpaying or losing that much. This could have a huge impact on your family's financial future.
Why You Need a Realtor (not an algorithm) to Understand the Real Value of Your Home
Sure, it's easy to get an instant value for your property online. But what's the point if it can have an adverse affect on your home value, your finances or maybe even your lifestyle?
I know a lot of people don't want to contact a Realtor because they're afraid of a hard sell. Maybe they don't want to sign a contract or pay all that commission. Or maybe they're just trying to fight their property tax appraisal or get a loan and don't feel like they need a Realtor.
The good news is that a lot of real estate agents don't mind running an accurate comps report for you just so you will remember them and their great customer service when the time comes that you do need an agent.
And even if you do understand the importance of using a Realtor to get an accurate value on your home, maybe you don't want to call around to find one. And that's okay. There is now an online service that will do all of that for you.
Real Estate Comps Today uses only Realtors who have volunteered to run comps reports for their customers nationwide.
It's a simple concept.
You fill out a 2 minute order form with a few details about the property. They send it to an agent who lives in the area of the property and knows that market well. They run the report and email it to you within about 1 business day. Done!
They facilitate the whole process and review your report to make sure it's a quality report done in a reasonable amount of time. Read more about how it all works.
What Kinds of Things Can Affect Your Home Value?
1. Landscaping and Curb Appeal:
First Impressions are everything. The very first thing a potential buyer sees is the outside of your home and yard. So, make it look great on the outside first!
2. Interior Appearance, Condition and Repairs:
When a buyer walks into a home for sale, the biggest turn off can be the condition of it, which includes repairs, maintenance, cleanliness and organization. Properties in pristine condition always sell for far more than homes that are disorganized, in poor condition, in need repairs or not well maintained.
3. Upgrades, Improvements and Construction Quality:
One of the biggest things that can affect your property value is the quality of the construction and features, not just on the surface, but foundational as well. This includes things like quality sub flooring that doesn't make noise, quality framing, beams, craftsmanship and materials as well as quality wood and tile floors, granite or comparable countertops, higher end sinks, tubs, faucets, light fixtures, trim, high quality finish work and more.
4. Your Floor Plan:
The functionality and flow of your floor plan can make a big impression on buyers and their offers. Assess your floor plan to decide if you need to make changes to it to open it up or make it more functional.
5. Amount of House Square Feet or Lot Size:
This one is fairly obvious. Home sales history shows that homes with larger square feet or larger yards tend to sell for more and homes with smaller square feet or smaller yards typically sell for less. In some markets, adding livable square feet to your home can make a big difference in its value.
6. Decor and Colors:
How you decorate your home can increase or decrease its value depending on the personal taste of potential buyers. That's why, if you are planning on selling your home at any point in the future, it's always a good idea to stay fairly neutral with colors and decor to appeal to the masses. If you go too overboard with lavish decor or expressive colors, you can actually cause your home value to drop. In that case, you'd want to redecorate before listing your house for sale.
7. Many Factors Can Affect the Value of Your Home:
Above are 6 of the most impactful ways that your property value can be affected. But there are so many other factors that can also make a big difference.
Features like a Pool, Deck, Garage or Air Conditioning.
Quality or Proximity of Schools.
Local Crime Rates.
Market Strength, Supply and Demand
Distressed Homes, Foreclosures and Short Sales in the Area.
Junk in Your Yard or Your Neighbor's Yard.
Area Noise Level, Trains, Freeways, Jets, Gun Range.
Environment, Toxic Waste, Natural Disasters, Flood or Landslide Area.
City Dump, Power Plant, Cemetery.
Inflation and Appreciation.
Ways to Increase Your Home Value
Update Your Home's Exterior and Groom Your Yard:
Paint the exterior of your home a neutral color but make the front door pop with a dark or bright color.
Adding new light fixtures to the exterior of your home can give it a new look.
Clean or refinish the driveway. Clean up and groom your yard. Landscaping features that can add value to your home are low maintenance landscaping and a water smart yard with ground covers, drought resistant plants, efficient sprinklers and drip hoses.
Open Up Your Floor Plan for a More Spacious Appearance:
An open floor plan makes rooms look bigger, giving the impression of larger square feet. Opening up the kitchen, dining area and living room to be one big great room can be much more appealing to buyers because it creates the impression of more space.
Changing your floor plan by simply knocking out a wall or two, can make a huge difference on the amount your house sells for. But do be careful to leave load-bearing walls in place, unless you plan to replace them with posts and beams to bear the weight.
Other ways to make your floor plan more functional or more appealing to buyers might be to add a mother-in-law apartment or an upstairs laundry room.
Floor plan features that are very popular among home buyers are things like a mother-in-law apartment or an upstairs bathroom. Consider adding these features to get higher priced offers or a higher appraisal.
Increase the Finished Square Feet of Your Interior Living Space:
Adding square feet to your interior living space can be done in several different ways. You can build an addition to your home, turn a garage or attic into living space or an extra bedroom, or you can finish the basement, adding extra bedrooms, bathrooms and a family room.
Adding finished square feet to you home can be your biggest return on investment, raising your house value significantly, especially if you live in a high cost market. You can then use comparables of larger or more finished homes to show the higher value.
Replace or Refinish Flooring and Paint:
The flooring and the paint in a home can affect its value so much because they flow through the entire home. So they give an overall impression of the home as a whole.
Fresh paint can liven up the entire feel of any home, making it feel new to visitors.
New flooring makes the entire home feel new. But the quality and durability of the flooring is also very important to buyers. Wood, stone and tile floors last longer and look more luxurious, adding to your home's value.
Remodel Your Kitchen and Bathrooms:
The kitchen is the golden jewel of every home. It is the room that buyers pay the most attention to. If you have a beautiful, functional kitchen with a good amount of counter space, cabinets and storage, it can attract a lot of attention and a higher price, even if the rest of your home is average.
The bathrooms are also a point of focus for home buyers, especially the master bathroom. Upgrade your bathrooms with a new tub, shower, tile, sinks and faucets in the latest popular styles.
More Tips for Improving Your Home value:
Declutter and organize.
Do a home inspection and get repairs done before selling.
Move out before selling.
Offer a Home Warranty.
Lower your home's energy costs with energy efficient light fixtures, dimmer switches, high efficiency windows, water heater, weatherizing and solar panels.
Add new technology like smart home systems, a security system, cameras, motion detectors, programmable thermostat, back-up generator, water filtration or air purifier.
Ways to Pay for Improvements That Increase Home Value
Home equity loan or line of credit.
Low interest mortgage and a low down payment leaves more money for improvements.
Ask the seller for concessions to cover repairs and upgrading when purchasing.
How Improving Your Home Value Can Improve Your Life
Improving your home value can improve your lifestyle in lots of great ways.
It can increase your net worth and asset value, making it easier to get a refinance loan, home equity loan or 2nd mortgage.
You could also use your additional home equity to buy a better house or to invest in business or real estate for higher income to afford a better lifestyle.
And let's not forget the personal satisfaction that can come from improving your home and it's value for more enjoyable entertaining, more personal comfort, pleasure and fulfillment in your beautiful space, happier relationships, less stress in a well maintained home and, last but not least, a better reputation with neighbors, visitors, loved ones and especially with business relationships.
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