Your Home’s Online Value

Who hasn’t checked out online real estate sites for price estimates of their own home?  Most of us are guilty as charged!

It’s easy to see why these sites and apps are tempting to use. Buyers and sellers can get marketing information directly at their fingertips.

However, keep in mind, these estimates are not as accurate or as consistent as you may think.

That’s why you shouldn’t insist your home be priced like your favorite online estimate. You could overprice it and your home could sit too long on the market without any interested buyers. On the other hand, you might see a disappointing number online that might be too low given today’s buyer demand.

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. 

Here’s what these sites are doing:

Calling estimates a “starting point” when determining a home’s value

What does that even mean? It means to get a more accurate analysis of what your home is really worth, a licensed professional, such as a real estate agent or an appraiser needs to actually see the inside of your home.  Why is that important?  Because every home is different. From where exactly it sits in the neighborhood to what upgrades you’ve done or don’t have makes a difference.  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 locally to bring the demand factor to the pricing table as well.  

Relying on data and information and not their own assessment of the home

These estimates are calculated by using public and any user-submitted data or corrections. They don’t conduct a physical inspection of a home. If there are any inaccuracies in the public information, it can’t be corrected on the spot.  Square footage from the tax records, for example, are notoriously incorrect and that is a huge factor in an online assessment of your home.   If you’ve added any square footage to your home that is not reflected, your online estimate will be incorrect.  

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, prices start to drop. An estimate of your home’s online value 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, such as 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. They need to look around and put together a market analysis showing you how your home compares to other homes.  

Determining calculations based on a computer model not a person

Computers are super helpful, but they lack the ability to pick up the nuances that really change the value of a home. When it comes to accurate pricing, human insight wins over the data-cruncher. Online calculations are based on an algorithm that can only use quantifiable data 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 really rocks.

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 the windows? You know what’s special about your home but a computer doesn’t.

Showing a Value Range consisting of a high estimate to a low estimate

For example, if the estimate is $300,000, it could have a Value Range of $260,000 – $340,000.  For another $300,000 home, the Value Range could be $285,000 – $315,000. See how the second range is less wide and closer to the estimate?

The wider the range indicates that less data is available for their final calculation. A smaller range between the prices means there was more information to come up with the estimated value. So keep that in mind when looking at estimates. Realize that there might not be enough information for a more accurate estimate.

As you can see, it can be “fun” to check out online estimate sites if you’re curious. However, don’t depend on them when the time comes to price your home. If you want to know what your home is worth, even if you aren’t selling anytime soon, email me at dana@danascoloradohomes.com. I can do a quick walk-through of your home and provide a more accurate number free of charge.

Also, if you or anyone you know is in the market for a brand new Colorado Home, be sure to check out my article on My Insider Secrets for Buying a New Home as well as my YouTube Channel where you will be able to tour lots of great new builds in the Denver Metro Area.

As always, my goal is to be your go-to resource for all things real estate.