in 2015 at $275,000. In 2017, Redfin’s calculator valued this 1890 Victorian home (4 bedrooms, 1.5 baths, and 2,100 sq. ft.) in a four-block area of “Grand Old Ladies” at $158,000. The apparent reason is that the six “comps” (comparable recent sales) include only two homes in this desirable neighborhood (over $300,000), while four others are outside this small neighborhood, although close, and sold for $150,000 to $199,000. Information that would be known to real estate professionals in the area is missing. These tools are worthwhile for obtaining “comps” of area sales; however, they aren’t accurate enough to use in arriving at a listing price.
PROFESSIONAL APPRAISAL
Real estate appraisal (also known as “property valuation”) is the process of developing an opinion of value for real property. This is the “market value,” or what a willing reasonable buyer would pay for the property to a willing reasonable seller. Real estate transactions almost always require appraisals because they occur infrequently on a given property and every property is different or unique in features and characteristics. An appraisal helps in various decision points. The seller can use the appraisal as a basis for pricing. The buyer can use it as the basis for an offer. Lenders use appraisals to know how much money to credit to their borrowers.
The most important factors in a house appraisal are:
• dwelling type (e.g., one-story, two-story, split-level, factory-built) • features (including design); materials used and the type of structure present and how they were built • improvements made
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