"But Zillow says...."
Should you trust any of the automated value models (AVMs)?
Many buyers are familiar with Zillow and use it to search for homes. Many sellers will use that site at least once because they believe it will accurately tell them what their home is worth.
There are also a number of other online sites out there that will provide the value of a home at a particular address. Are any of them accurate?
The answer is maybe, maybe not. It depends. Sometimes they are right on and often they are way off.
You should know that all of the automated value model software applications compare a home's "facts" (information available from the public record) with recent sold prices for similar homes in the surrounding area. Those "facts" include details available on the county assessor's website - things like year built, square footage, number of bedrooms and baths, number of garage bays, and the lot size.
The main issue with AVMs is that as wonderful as computer applications are they do not have the ability to know and consider all the subjective aspects of a home. An AVM does not know if a home is at the end of a cul de sac with beautiful mountain views, if it is all updated or remodeled, or if it is absolutely gorgeous in comparison to other homes that have sold around it. An AVM also cannot know if a home has been neglected and is in disrepair, if it needs a new roof, if it is totally outdated or needs all new paint and carpet, or if it smells like cat pee from top to bottom.
It’s important to remember that the AVMs also don’t know any of those subjective things about the recently sold properties that are being used in their calculations, and that by itself can throw the value way off.
I will admit that it is possible for an AVM value to be accurate. That may happen if the subject home is very average in comparison to the homes that have sold, and if the sold “comps” (comparison properties) are also very average in relation to each other.
Usually what happens, however, is that the subject property is different in some way from the comps that were used by the software application. There can be small differences or some very major ones, and they all translate into a price variance from the quick estimate of value the AVM gives a consumer. While I’ve seen an AVM value be pretty close to reality I’ve also seen the predicted value given by an automated value model be off by more than $100,000!
If you are thinking of selling your home please do not rely on the accuracy of a price provided by any of the online tools. Instead contact a real estate professional who will take absolutely everything into consideration before meeting with you to determine a fair price at which to list your home.
For those in the Denver metro area please call me at 303-589-5494 for a free market analysis.
If you are outside this area please let me know and I can connect you with a reputable person wherever you live.