There isn’t a week that goes by when I don’t hear, “According to Zillow, my home is worth X amount.”
As a Realtor, this always makes me cringe. Sites like Zillow and Trulia use automated valuation methods, which are online software programs, to pull a variety of facts to establish your home’s value. While, in theory, this should work, it is rare to find two homes that are exactly the same in every single way.
Think for a moment of two homes, both 2,500 square feet, with the same floor plan and in the same subdivision. According to an online evaluation, both homes are worth $250,000. House A has limited upgrades and a basic gravel backyard. It also smells of last week’s fried chicken the moment you walk through the front door. The window coverings are basic, the paint needs touching up, and the owners have done little to decorate the home.
By contrast, House B looks like a model. It has granite counters, new bathroom cabinets, presents like a Pottery Barn showroom, and has a well-maintained backyard, with blooming plants and a water feature. If you are the owner of House A, you think your home should absolutely be worth $250,000. If you are the owner of House B, you definitely don’t think your home should be worth the same has House A. So, whose home should be worth the online estimate? Probably neither. The real marketable value of House A may be $225,000, while House B may sell for $275,000.
Online estimates not only lack accuracy because they can’t account for the general condition of a property, but they also are often wrong simply because the data used is not relevant. When appraisers value property, they only consider sales that have occurred in the last six months. Just because a home sold across the street a year ago for $300,000, doesn’t mean yours is worth $300,000 today. It may very well be worth much more. In fact, we just had two properties sell last month for more than their online valuation.
The Current Market Dictates Your Home’s Value
The real estate market is always changing, based on supply, demand and what is going on in individual neighborhoods. Perhaps you have the only home in your area with a four-car garage. This may make your home more valuable to buyers.
On the flipside, your home may be one of 10 homes with the same floor plan for sale in your area. With greater supply, your competition suddenly will be greater as buyers compare your home to those similar on the market. This increased competition may translate into increased days on the market and lower values. In our market, new home sales also impact resale values. Builders recently have been offering incredible incentives and favorable financing options, which have driven away a segment of the market from resale. This increases the general available housing supply, but not with like properties.
What Are You Going To Do Next?
Most of us usually think our homes are worth more than what the market dictates. This seems to happen in good and bad markets. The key is to look at what your next step will be. If you sell low, you will probably be buying low. If you are selling high, you will probably be buying high. If you are moving out of state, study the market where you are considering moving. If that market is hot, you may need to keep a competitive price on your home here, and sell quickly, so you don’t get priced out of the next city.
Of course, always get as much information as you can. Don’t hesitate to call us any time for a free market consultation on your home. Get the real facts, so you can take your next steps.
John Karadsheh is the Designated Broker for KOR Properties. He has been a Multi-Million Dollar producing agent for more than 12 years, and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS). In 2014, John was voted the No.1 Real Estate Agent in Arizona by Ranking Arizona. You can reach John at (480) 568-8684, or visit his website at www.KORproperties.com.