I just added one to GarageHomesUSA.com today. They are great for what they are… as long as the limitations are kept in mind. Here is the direct link. Feel free to wander over in a moment…
AVTs have become all of the rage in the last couple of years. Zillow is the big name, but there are other providers. The basic idea is that one can enter the address of almost any property and get a computer generated valuation.
The great part is that it is easy to quickly find a value for the property.
While looking over a myriad of properties, or thinking of selling a property, getting a baseline estimate is a great idea. Too many people work off of emotions while trying to value a property for sale… theirs or one they might want to be theirs.
The dark side is the accuracy of the valuation.
It might be dead-on accurate. It might be off by 20%… or 50%. It depends on if there are mistakes in the data that is being used for the computer model. Among the things that could be wrong or missing in the data are:
- correct square footage. The computer models are heavily based on square footage. If the tax records are off on that… for the subject OR the comps… the estimation will be off.
- condition. The computer model can’t compare properties based on their condition, because it only sees the prices paid and tax appraisals.
- recency. In smaller neighborhoods, there might not be many recent and comparable sales. That puts the computer in the position of not having enough data to work with.
- location. In many neighborhoods, there might be different sections with homes at different ages or styles. There might also be nearby neighborhoods with similar sized homes that aren’t actually comparable. The computer models may not be able to properly discriminate actual comps from things that might be largely similar, but only on paper.
Of course, as a real estate professional I’m biased, but it really does take a qualified real estate professional that will actually look at the property, and at the comps. That means that a real estate agent doing a CMA, or a licensed appraiser doing an Appraisal. Or both…
Look at several data points. Take off the rose colored glasses and look honestly at the property, size, condition, style, location and any other factors. Look at the CMA and/or Appraisal.
- Are the comps really comparable?
- Are the adjustments reasonable?
- How does the condition compare?
The idea is to find an honest valuation that is reasonable. And, if you are listing a property for sale… don’t just automatically list with the agent that tosses out the highest number. Look at the basis.
So, why did you add the tool to the site?
Simple. It is a useful tool. When used properly, it is very effective. Wrenches aren’t good hammers. You can certainly pound something with one, but that doesn’t mean it will do the job.
