I can’t think of a question that I am asked more…

What is my home worth?

And there as many answers as there are times the question is asked.  There are a lot of sources for the information…

• Appraisers
• Real Estate Agents
• Automated Valuation Models

And the results come in many flavors…

• Appraisal
• Comparative Market Analysis (CMA)
• Broker Price Opinion (BPO)
• Zestimates

There is one thing that they all share in common.  They are all opinions.  And they are all flawed.  That’s right… all flawed. They might hit the right value… but if they do, it purely a fortuitous accident.

Keep in mind, I work very hard on the accuracy of my CMAs.  I go over the data and try to stake out the trends as well as the differences between the subject and the comparable properties.

I know agents that do BPOs, and appraisers.  I have studied Zillow’s data that they use to get Zestimates.  In each case, they produce the best estimate of value that they can with the data available.

But they are all missing something…

What each opinion is missing is the buyer.  When it comes down to it, the person that is actually going to determine the market value of a property is going to be someone that may not have any training at all…

What is ironic is that the moment the closing is over and the sale is complete, the market value becomes a vaporous moving target again.

The market value is what a buyer is willing to pay and a seller is willing to sell for.  We can study the neighborhood values, floor plan, amenities and square footage.  We can crunch numbers and compare.  We can make spreadsheets and track trends.  But, a buyer gets to determine what the value is to them… and then see if the seller will go for it.

The point is…

It isn’t magic.  It is science… and an inexact science at that…  and a bit of art.  And pricing is actually a strategy.  The idea is to price it right to get it in front of the right potential buyers.  And that is the difference between a real estate agent, a BPO, an appraiser and an automated valuation model.  Only the real estate agent is working towards finding a willing buyer.

The other methods are important, and have a place…  And all should be in the same neighborhood.  Finally, make sure your real estate agent knows that pricing is a strategy, not a contest.