quick and easy, but they don’t take into consideration factors like 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 was entered into one such system, the home last sold for $380,000 in 1998; it was appraised for re fin ancing in 2015 at $675,000. In 2017, Re dfin ’s calculator valued this 1890 Victorian home (4 bedrooms, 1.5 baths, and 2,100 square feet) in a mixed neighborhood, a t $658,000. Th e apparent reason is that the six “comps” (comparable recent sales) included only 2 homes in this desirable neighborhood (over $700,000), while four others outside this small neighborhood, although close, sold for $580,000 to $600,000. 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 bee n. Th ese 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 a t $820,000. Th e online valuation determines the house is worth $840,000. Based on that estimate, the buyer o ff ers the asking price. When a professional appraisal comes in at $800,000 the buyer wonders why the values are s o diff erent and whether he overpaid. Th e house was listed at $820,000 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 pa y? Th e fact that they paid $820,000 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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