Online tools will provide you with a very basic estimate of your home’s current value based on recent comparable home sales in your area using a comprehensive database. Note that the assessment is based on available data with no guarantee of accuracy and often uses an algorithm that simply averages comparable sales in the geographic area. Additionally, since it is a math equasion, it cannot take into account the differences a real estate professional will take into account when homes in a very short distance from each other, are actually in a very different kind of location. These tools might be quick and easy, but they don’t take into consideration factors like location, current local trends and the condition of the property or that of the properties it is being compared to. Be aware that the prices arrived upon might be highly inaccurate. Let’s look at a home that was put into one such system. The home last sold for $180,000 in 1998; it was appraised for refinancing in 2015 at $275,000. In 2017, an online calculator valued this 1890 home (4 bedrooms, 1.5 baths, and 2,100 square feet) at $158,000. The apparent reason is that the six “comps” (comparable recent sales) included only 2 homes in this neighborhood (over $300,000), while four others outside this small neighborhood, although close, sold for $150,000 to $199,000. 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
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