The Wall Street Journal recently published an article that points out some very useful details about the automated value calculators in several popular real estate sites (see it HERE). As a Realtor, I often talk with people who have visited these sites to get an idea of the value of their property. I understand their interest in getting this information conveniently and anonymously. The problem is that the accuracy of these sites varies considerably, so once a property owner gets a valuation number from the sites, the owner then has to figure out if it is really useful at all. The real estate sites themselves warn the viewer to not put too much stock in the accuracy of the numbers. Below is a screen shot of the accuracy chart showing some NC counties, including Iredell County. The two stars for Iredell mean it is only a “Fair” estimate. Others can go from one to five stars. You can see the full chart and explanations of how their system works HERE.
These calculations are done by pulling sold data from county tax sites. Humans don’t look at it to check for accuracy or reasonableness. These systems don’t have any idea of the condition of the houses for which they’ve pulled data. They have no idea of how much updating may have been done. They don’t know if the landscaping is better or worse than the neighborhood average. In some cases I’ve seen price calculations for houses include prices for raw land in the neighborhood in addition to house sales which obviously draws down average and median prices of the sold houses.
The point here is that these tools can get you roughly in the ballpark, but they are not numbers that you’d want to try to defend in an actual home sale. Those transactions which involve Realtors and Appraisers who have to put much more time and judgement into property valuation than can be done by a computer are going to be far more in tune with the actual market at the time of sale. This is not to say that Realtors and Appraisers will always come out with extremely accurate predictions of eventual sale prices. Real estate properties generally can’t be treated as commodities that all have the save value. Since value is in the eye of the beholder, some of that determination is dependent on what buyers happen to be in the market, what sellers (alternative properties) are in the market, and the motivation and experience of each.
Go ahead and pull up you property value to see roughly what it’s worth on one of these sites. Just do so with your eyes open and understanding the relative accuracy of the valuation. If you want to get a much more accurate valuation, call a human- like a Realtor or an Appraiser, and have confidence in the information they provide.