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Are third-party online home values accurate?
Plenty of sellers have visited online home valuation sites only to be shocked at the published value of their homes. Most sellers are pleased when the values appear higher than they expected, but many online valuations come in far lower. So, should you use these values to price your home for sale?
These sites provide greater transparency to homebuyers and sellers by making data derived from public records more accessible. They publish what you paid for your home and how much you pay in taxes. But few consumers realize that two homes right next door to each other could have vastly different values.
The property tax base resets for each home every time it’s sold. If you’ve only owned your home for five years, you are likely paying much more in property taxes than your retired neighbors who bought their home 30 years ago. Yet your home may not be “worth” more unless you’ve done some substantial updates and/or additions.
Between tax roll data and listing data, home valuation sites apply their own secret sauce, or algorithm to come up with estimates or approximate values of what homes in a given area are worth. Sometimes the results are spot on but they can also be inaccurate if they include properties not currently on the market. These homes have not been tested by the current marketplace and cannot possibly contribute to recent market values.
There’s no way to quantify subjective information such as how well the home is maintained, curb appeal, interior design, window and yard views, and neighborhood popularity. For these reasons, online valuations should be used only as one of many tools to estimate a home’s value.
Your best approach to choosing a listing price is to ask your Berkshire Hathaway HomeServices network professional for a comparative market analysis, or CMA. They can show you the most recent listing asking prices and sold comparables in your neighborhood.
If your home is estimated for far less on a home valuation site than current comparables, be prepared to argue pricing with buyers who take these numbers as gospel. If they have a real estate agent representing them, the agent can confirm the comparables you show them to help them understand the market a little better.
By the same token, don’t expect to get more for your home if home valuation sites put your home in a higher price bracket. Recent comparables tell the true story of the current market as long as buyers and sellers are using the same search parameters.
Remember, a set of comparables is only a guide to pricing your home, so you can sell your home quickly and for the most money possible in the current market.