Home Valuation Sites vs The Real World
Over the weekend I had the pleasure of meeting with a young couple who were being transferred to Ohio. Both are very well educated as she is in the education field and he has an engineering degree. I had them show me their home from top to bottom and point out all the upgrades they had done, we then reviewed the marketing plan in depth and then we came to the market analysis. Here is where the rubber meets the road. I asked what knowledge they had of other properties in the neighborhood from a sale standpoint. They admitted their knowledge was limited to picking up sales fliers in front of homes during a walk and the use of an online home valuation tool.
What Did the Analysis Show?
First off they purchased the home in November of 2005 somewhere near the peak of the Atlanta Market. They refinanced the home in February of 2008 to take advantage of a lower interest rate and rolled the closing costs into the loan. Soon thereafter several foreclosures and short sales hit their neighborhood. Truth be known their home today is worth about 3.5% less than they paid for it. While there are areas of the country that would be happy to be down only 3.5% this is devastating to a young couple that has agreed to a relocation largely based on incorrect information received from an online home valuation tool.
Close Only Counts In Horseshoes and Hand Grenades
While this couple decided to practice their due diligence with the aid of an online home valuation tool, I think it is obvious that an online tool has no experience in a neighborhood or community. Unfortunately the valuation the site provided them with was substantially incorrect. Too make matters worse, this couple used the valuation provided in the negotiating of their relocation package. One of these online sites states in their own data comparing their valuation to actual sale prices their estimate of value was within 20% of the sale price 68% of the time. I don’t think that is something to really hang your hat on is it?
Special Words of Caution
To Home Buyers and Sellers: Please do not use these online home valuation tools as anything other than a video game. Sure they make it seem as though you are getting accurate information but the small print that many times is located on a different page of their website will state that this should be used only as a starting point and you should consult with a professional to establish a true value. Why not save yourself the time and heartache of inaccurate data and just consult with a professional first.
To Home Valuation Sites: While your tools were interesting at first and seemed harmless, I can now see how consumers can be adversely affected by them. I don’t care how many times you say to get a professional opinion; consumers will take you at your word. When they come to a nationally recognized site they are going to believe you without looking for the mice type disclaimers on whatever page you have them linked to. If you really care about the consumers take these inaccurate valuation tools down.
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