Home Buying in 21771>Question Details

Tav805, Home Buyer in Mount Airy, MD

How do home value estimates on various sites impact potential offers?

Asked by Tav805, Mount Airy, MD Tue Apr 30, 2013

I have seen some houses listed at $339,000 but the sites list them at no more then $286,000. As a buyer how should you proceed? Obviously with your best offer but you don't want to pay asking price if house is not worth it.

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Jessica Hood & Laura Roskelly’s answer
Hi Tav,

They don't, or at least they shouldn't. Zillow is the big one and if "cookie cutter" neighborhoods where homes are the same s.f. and style they actually do well on value. But if you get into an area with a variety of home styles they don't do well at all.

Assuming you are working with a Realtor you and your Realtor should review a detailed comparison of recently sold homes in the neighborhood where you are buying and rely on that information plus the condition of the house to determine a fair offer price. Best of luck!
0 votes Thank Flag Link Wed May 1, 2013
Valuations on real estate websites do not necessarily reflect real values. These values are determined by tax records and prior listing info and then those sites have algorithms to give an average value based on the info the site has about that home and the surrounding homes it uses to compare to.
0 votes Thank Flag Link Mon Oct 13, 2014
There are no standards in our industry and many do not know how to accurately enter data into the system. Example: many will enter a ranch home into the system which has a walkout basement, is this a ranch (lower value) or a reverse 1 ½ (higher value). The national websites are terrible and realtors & appraisers still make mistakes but it’s the best these folks can do. The real problem is education & standardization as neither the realtors nor the appraisers require a college education, most can be licensed with as little as 80-120 hours of training.
0 votes Thank Flag Link Wed May 1, 2013
Buyers should use a Realtor and the MLS system when submitting an offer. Through this system it will paint an up to date accurate picture of what the market looks like and should depict a fair and reasonable offer based on market conditions and overall condition of the property.
0 votes Thank Flag Link Wed May 1, 2013
Automatic Home Value Estimates are a statistical evaluation based on a wide range of data. Most are not an accurate represention of value in a fast changing market. The best answer to your question would be to have a professional and experienced full time Realtor discuss the property with you. Keep in mind that when purchasing a home, your mortgage lender gets an "Appraisal" done by a licensed and certified Appraiser. If the appraisal does not meet or exceed the sale price, you will not get financing approval. In that instance, the seller will lower the price to match the appraisal if they want to sell their house.
0 votes Thank Flag Link Wed May 1, 2013
Many of fus Realtors "Do Not" place any value in Zestimates in property valuation listed with property
listings on the internet. A residential appraisal or an competitive market analysis of the home using the most recent sold data is the only reliable measurement of home value. Understand this, you can have 3 appraisals of the same property with-in the same week with different valuations on the same house. This is a people business and not every appraiser will see the same house the same way.

Greg Myers
RE/MAX Realty Group
0 votes Thank Flag Link Wed May 1, 2013
There are a number of automated valuation sites and I wouldn't rely on any of them. They are based on the most general data of age, size, room count, etc. but can't factor in condition, updates, deferred maintenance etc.
Buyer's who use these sites as their guides are getting lousy advice. Zillow admits to not being a final value, but a place to start.
As you look at all the homes in a certain neighborhood, size, etc. you are a more reliable guide to values than these sites. As some home disappear and new ones come on you see the level of activity in the market and which homes are selling and which aren't.
Trust your realtor, the CMA they provide and your own eyes more than any of these sites.
0 votes Thank Flag Link Tue Apr 30, 2013
Dear TAv805,

The value estimates on these sites do not impact potential offers. I'm sure you remember that all real estate is local. For structuring an offer, you want to access the comparables on sold homes most like the property you are interested in in the area of the potential purchase. These sites aggregate data and are not reliable when it comes to individual properties.

If you are ready to make an offer, talk to an agent you trust. He or she will be able to give you a value range, with supporting detail, for an offer as well as tell you what recent closed sales on like properties have been down to an offer % level.

I work in the Mount Airy area as both an agent and an appraiser and am familiar with homes in that area. If you don't have an agent, give me a call or send an email. I will be happy to help you.

0 votes Thank Flag Link Tue Apr 30, 2013
Hi Tav,

if you are working with a Realtor, they will assist you in preparing an offer. They will also provide you a CMA or Competitive Market Analysis of recent sales & active listings for you to make an informed decision on how you want to proceed with your offer.

If you are financing your next home purchase keep in mind you will have an appraisal thus your lender will only provide you a loan where with appropriate value.

Good luck
0 votes Thank Flag Link Tue Apr 30, 2013
Zillow and other sites that have automated valuation tools have a margin of error of 10+% which is huge. There's no algorithm that can properly analyze the value of a property. They go off of the public records and sales data in the area but they don't take into account the school district or other factors that affect the market value like the size of the lot, the proximity to metro, or the condition of the property which is enormous. Educated buyers know that these valuation systems are worthless. It's best to consult your agent or research comparable sales to come up with the real market value. You can search sold comps on Redfin.com. We also have a home price tool. It's in it's infancy stages and needs some tweaks to be good but you can always send the price tool to me and I can give you my opinion.
0 votes Thank Flag Link Tue Apr 30, 2013
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