Who hasn’t checked out online real estate sites for price estimates of their own home, a neighbor’s home, or even a beach house when on vacation?  Most of us are guilty as charged!

It’s easy to see why these sites are so popular, giving buyers and sellers marketing information directly at their fingertips.

While its fine to satisfy a curiosity, when seriously considering buying or selling, it is important to know that these estimates are not as accurate or consistent as you may think.

And what would be the danger in relying solely on an algorithm to provide your information? An overpriced home could sit too long on the market, costing you time, money, and making buyers wonder “what is wrong with their house?”. OR you may underprice and potentially leave money on the table (pricing on the low end of an estimated value range can be a useful strategy, but severely underpricing can backfire).

Here are 5 reasons why online estimates shouldn’t be your only resource for pricing a home as a seller or when scouting homes as a buyer.

The sites themselves state their estimates are a “starting point”. What does that even mean? It means “start here but then go get a more accurate analysis”. A licensed professional, such as a real estate agent or an appraiser needs to actually see the inside of your home, discuss recent updates, analyze the real-time market, and more thoroughly vet the comparable homes used for comparison. 

Why is that important? Because every home is different – from where it sits in the neighborhood to what upgrades you’ve done or don’t have compared to the most recent sales. On top of that, buyer demand often commands prices, higher or lower, than what the most recent sales would suggest.  You need someone who knows what’s going on behind the scenes to bring the demand factor to the pricing table as well. 

Estimates are based on an algorithm. Computers are helpful for so many things, but they lack the ability to pick up the nuisances that really change the value of a home, which is why when it comes to accurate pricing, human insight wins over the data-cruncher. Online calculations are based on an algorithm that can only use the quantifiable data available to it and not anything subjective – like the quality or the appeal of a home.  It can’t “systematically gather and verify” certain information, such as a lovely flat backyard that’s great for entertaining, new granite countertops in an open concept living space, or if that master suite bedroom addition is reflected on the tax records.

It only knows the number of bathrooms or bedrooms and nothing descriptive about them. Sure, you want to know how many bedrooms a home has, but what about how roomy they are, the size of the closets, and the amount of light from windows? You know what’s special about your home, but not a computer.

Online data may be lacking. These estimates are calculated by using public and any user-submitted data or corrections. They don’t conduct a physical inspection of a home, so if there are any inaccuracies in the public information, the estimate may also be inaccurate.  For example, square footage from the tax records is notoriously incorrect (especially if there have been unreported additions) and that is a huge factor in an online assessment of your home. 

Additionally, the market data is lagging by at least a month or two. Buyer demand can significantly shift from month to month, affecting real-time market value.

Lacking direct knowledge about the local market or your particular neighborhood. Certain neighborhoods can be really hot and in demand, but just a few blocks over in another neighborhood, prices start to drop. An online estimate can’t differentiate neighborhoods as much as you’d expect. They use data from an area much larger than your neighborhood. Many times they use sales data from an entire county to extrapolate changes in the housing market.

Plus, their systems don’t take into consideration the condition of other homes on the street, if there is a feature your home has that others don’t, or even if the home is on a busy road. That’s why it’s best to have a professional physically go to your home, look around and put together a market analysis showing you how your home compares to other homes. 

There is nothing wrong with these online calculations to give you a rough idea of how a home is worth for fun or for general info purposes. But if you are truly considering a sale or purchase, reach out to me at melissa@melissazittrealtor for an accurate valuation that considers the real data and current market!