location, current local trends and the condition of the property. Be aware that the prices arrived upon might be highly inaccurate. For example, a home in Inman Park Atlanta was put into one such system, Redfin (https://www.redfin.com/what-is-my-home- worth). The home last sold for $180,000 in 1998; it was appraised for refinancing in 2015 at $475,000. In 2017, Redfin’s calculator valued this 1890 Victorian home (4 bedrooms, 1.5 baths, and 2,100 square feet) in a quarter-mile radius at $407,000. The apparent reason is that the six “comps” (comparable recent sales) included only 2 homes in this desirable neighborhood (over $450,000), while four others outside this small neighborhood, although close, sold for $350,000 to $399,000. Because the system doesn’t understand the makeup of the area and simply pulled prices from a broader geographic area, the arrived-upon price was far below what it should have been. These tools are worthwhile for obtaining “comps” of area sales; however, they are not highly accurate in arriving at a listing price.
EXAMPLE OF DIFFERING HOME VALUATIONS
A buyer is interested in a home listed at $420,000. The online valuation determines the house is worth $440,000. Based on that estimate, the buyer offers the asking price. When a professional appraisal comes in at $400,000, and the existing tax records assess the home at $300,000, the buyer wonders why the values are so different and whether he overpaid. The house was listed at $420,000 because at that price, the home would sell in a reasonable amount of time. Why would the appraised value not be whatever a buyer was willing to pay? The fact that a buyer paid $420,000 does not mean that is the true value of the home. Certain factors may weigh in — undesirable businesses located near the property, for example. Online valuations cannot take into consideration the condition of the property or the qualities of the neighborhood.
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