Genie, Home Buyer in Sacramento, CA

I just put in an offer on a house and after going to housevalue.com I learned the home is 20k overpriced.

Asked by Genie, Sacramento, CA Mon May 19, 2008

How accurate are these website? Should I be worried or take back my offer.

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Answers

10
Genie, you cannot rely on websites to be 100% accurate. I hope that your realtor used recent solds and pendings to help you arrive at the price you offered. Has your offer been accepted? Depending on what state you live in, I'm not sure you can "take back your offer" just because you changed your mind. Surely you built in a contingency clause that will allow you to withdraw under certain circumstances. Buyers should be very careful when presenting an offer and be armed with all of the facts. Best of luck to you.
1 vote Thank Flag Link Mon May 26, 2008
Mark, appraisers have to back their appraised value with fact. They must note recent home sales in the area, note which homes where used, make minor adjustments for square footage, condition, etc, they are not able to manipulate the figures to arrive at whatever price they want. We even have appraisers calling the office more frequently for HUD-1 statements, since so many sellers are making huge concessions by jacking up the price of their home, the appraisers request the HUD-1 to verify what the "actual" sales price for the home was. I'm sorry if you had a bad experience involving an appraiser but it should not skew your opinion on the entire industry.
1 vote Thank Flag Link Mon May 26, 2008
You should not worry if you have an appraisal contingency in the offer. An appraisal contingency will allow you to back out or renegotiate (if the seller is willing and able to renegotiate) Or you and your agent may know some things that housevalue.com does not.

Maybe the house you offered on is in better condition than the average trashed out bank repo, or has some feature that housevlaue.com didn't figure in.

I think the websites are pretty amazing, they come with in 10% on a regular basis. pretty good for a computer chip.
1 vote Thank Flag Link Mon May 19, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Hi Genie,

I am sorry to hear that you are having second thoughts regarding the offer you made on a property. Are you working with an agent who is familiar with the area where the house is located?

There are lots of websites that claim to be able to predict the value of property, sight unseen. As I have said in the past, doing an estimate of value is an art rather than a science. These websites use a series of complex algorithms and fancy mathematical equations to predict the value of a property...often times, they use "comparable" property sales that are in areas that are just not relevant to yours. If your property in question were truly in Colonial Village (which is the area Trulia indicates), it is very possible that the site you used based the value of your property on recent sales in nearby Oak Park, which is not an apples to apples comparison.

Also, these equations do not take into consideration any upgrades, features, amenities, choice locations, etc. On the other side of the coin, they don't factor in negative variables either (being on a main road, leaking roof, abandoned house next door, etc.).

Since none of us on this forum know anything about the property in question, it is difficult to pass a lot of judgement that the value presented by this site is valid or not. My suggestion, much like some of the others, is to find out what the recent, relevant sales are and determine if your offered price is in line. Also, if you are getting a loan for your property, your lender will send out a licensed appraiser to determine if the value of your property is adequate to secure the loan you obtain.

Good luck to you...
Web Reference: http://www.erinattardi.com
1 vote Thank Flag Link Mon May 19, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
Contact
You can get the same results from Zillow.com, too, and those aren't accurate, either. In some areas, particularly subdivisions where all the homes are identical to each, the prices are a bit more realistic. But computers can't do the job of a human -- yet, anyway. The computer can't differentiate between a home that has $50,000 of upgrades and another that is gutted inside. But an agent can tell you, especially an agent who specializes in those neighborhoods where you are looking.

Since you have already submitted an offer, the next step would be to ask your real estate agent to give you a list of comparable sales in the neighborhood -- which you probably should have received before making an offer. Otherwise, how did you come up with a price? You can't use existing inventory to price from. You need to look at sold comparable sales and also the pending sales -- because pending will show you where the market is moving. Pending sales won't give you the actual "sold" numbers because they are still in escrow, and that information, unless your agent can squeeze it out of the listing agent, is not available, plus it is sometimes confidential. But you can look at the list prices of the pending to figure out a median.

On top of everything else, you will pay for an appraisal, unless you are paying cash. The appraisal will show you an accurate opinion of value. If it doesn't appraise for the sales price, depending on the contingency clauses in your contract, you can cancel.

But please do not rely on online web sites to disclose value. If they were accurate, you wouldn't need an appraisal and banks would not require an appraisal. :)
1 vote Thank Flag Link Mon May 19, 2008
90% of the websites are not at all accurate. You need a person that knows the area and the homes there to fine tune the prices. Prices can be as much as 25% off, depending on what data is used.
I saw one website for my area recently that lists the median prices of homes as over $1M. I know that they are selling for the $800,000 range, so their numbers are based on I don't know what.
Your local Board of Realtors will often have numbers on tehir website, which tend to be a lot more reliable.
1 vote Thank Flag Link Mon May 19, 2008
Those sites are not always very accurate. There are a lot of factors involved. Ask the agent for the comps he or she pulled to support the price. I am guessing that your agent did this as well, so you may ask to see those comps...Also, did you write the contract as contingent on appraisal? If so, that may help protect you.
Web Reference: http://www.mcglade.com
0 votes Thank Flag Link Fri May 30, 2008
Hi Genie: Your question about how accurate is this website can be answered like this. Housevalues uses real estate agents in the area to prepare a comparable market analysis based just on the homes nearby yours. They don't have the advantage of viewing the home they are comparing, so a $20K difference could just be in condition and amenities for that home.

If you have an appraisal contingency in your purchase agreement, that will allow a renegotiation of the price after appraisal if the appraisal comes is lower than your offer.

Good luck.
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Tue May 20, 2008
If your "offer arsenal" doesn't include recently CLOSED homes- the most important evidence for you to review, forget estimates; locate facts.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Mon May 19, 2008
I'm curious, how did you arrive at the offering price? Did you have recent sales in this neighborhood? Recent sales are the best indicator of current value. Also, keep in mind that the online valuation services usually offer a range of prices, not a specific price. It is quite possible that Housevalue.com has an inacurrate valuation of this property Ed Robinson
Web Reference: http://edrobinsonsells.com
0 votes Thank Flag Link Mon May 19, 2008
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