There is a storm brewing over who to crown as king of the online home value estimate race. Over at Sellsius Blog and also at The Front Steps Blog there were reps from both Cyberhomes and Zillow fighting it out through the written word in cyberspace. It was bloody. Most of the arguments came down to the AVM’s (automated valuation model) of each of the two companies. Who won? Keep reading…
What Do AVM’s Have to Do with My Homes Value?
Well, not much! It seems that with ALL the objective value of these AVM’s and their algorithms, it doesn’t much help the value of an individual home owner. You see, the appraisers and Realtors had it right all along, nothing can quite beat the value of going to the home, looking inside, seeing the street and neighborhood of the home, and comparing it to the other comparable homes sold in the neighborhood, then coming up with a objective and SUBJECTIVE analysis of the property. There is NO other way to do this. All the AVM’s and algorithms in the world cannot give you this kind of human, hands on analysis of a your home.
Zestimate; $1 Million
How accurate are Cyberhomes and Zillow in Utah Real Estate Estimates?
Utah is a non-disclosure state. That means that when someone sells their home in Utah, the sold data is NOT recorded in the public record. Companies like Zillow and Cyberhomes usually rely on valuations from the county assessors office for the data they use to generate these values. Many of the assessors offices in Utah in 2008 were inundated with property valuation disputes, because of inaccurate assessments perceived by property owners; and rightfully so. Other states like California record sales prices in the recorded data, so it is easier for third party sources to gather more accurate sales information based on sales in a particular area, and come up with a more accurate valuation. But if you read comments about the accuracy from home experts in these areas they agree, the data is still woefully inaccurate.
Can These AVM’s come close to the value of my property?
The answer is yes. They can come close. But is that what you are looking for when you want to sell your home? Do you want to market your property based on a guess? A guess can cost you tens of thousands of dollars, or more! If you want entertainment, go to these sites and get your valuation; if you want to sell you home, call a professional that is experienced in your area. They will go inside your home and look at the amenities, see the street and neighborhood, compare other homes that sold, and how those homes and features compare to yours. Finally, they will come up with a value that is UNIQUE to you and your situation. Call your local Realtor and get the facts, whether you hire one or not, isn’t this a better way to go?
The Winner?
YOU!
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{ 11 comments… read them below or add one }
One algorithm does not fit all geographic areas. That is the problem with Z and C.
Homekeys has built its algorithms around a local approach. You need to do so in order to make it as accurate as possible. We have done it for the state of Florida.
Frequent updates to the values are a must. Waiting 30 plus days for updates diminishes the value of the AVM.
Homekeys is only in Florida today but the know how and the infrastructure are in place to tackle any “geography” in the USA.
Homekeys stands by our AVMs in Florida as the best AVM a Florida resident can find.
AVM is simply a tool and simply a good starting point and no substitute for an appraisal. Technology is improving the accuracy of all AVMs and will continue to do so for the foreseeable future—all said, it is unlikely appraisers will ever be replaced…rather the appraisers will be more effective by utilizing the AVMs.
Take a look at our site http://www.homekeys.net whenever you can. We did for Florida, we can do it for Utah or anywhere.
Manuel Iraola
CEO, Homekeys
Manuel,
A local approach seems interesting. I will take a look at the site. Too many homeowners are relying on these AVM’ as value for their home that can be taken to the bank, which is not the case. I think the AVM’s are very useful as an indicator of an area, and trends of an area, but I think that zestimates/etc. on individual homes are a disservice to the homeowner. There are too many variables to consider. Remember, appriasers get ALL of there information from Realtors. The very best market value indicator is what a buyer will pay for the home.
Thanks for your imput!
Fantastic post Marvin, I couldn’t agree more.
Besides the non-disclosure issue (UT is voluntary disclosure with a surprising amount of sales that are public), I have not had good experiences with the accuracy of public records in UT. Greg Tracy from Blueroof blog once pulled assessor data and compared it to listing info for 10 Salt Lake listings and 9 out of 10 of the public records were significantly off in important facts like total sq.ft. and number of bathrooms. This quality of raw data causes huge challenges for AVMs like Cyberhomes’ that do not consider the listing agents’ data when calculating estimates. This is another reason to ensure that your listings are on Zillow – the Zestimate algorithm uses the listing data to refine its accuracy.
Manuel –
Zillow doesn’t actually use only one algorithm. Given the great variance in the completeness of public records, I don’t think it’s really possible to use only one model. You’re right about frequency – monthly doesn’t hack it for many people. We’re currently refreshing Zestimates up to 3 times a week.
David,
Thanks for your clarifications on your product. Does Zillow use listing data to give Zestimates? Because these days, listing prices tend to be way off for value purposes.
Thanks for your feedback!
Marvin,
I agree with your general position.
Our AVM(ValueSearch) is one of the tools – but not the only tool- we give our clients to understand the dynamics of the market. Our site gives them free online access to all historical comparables as well as those active listings that are truly comparable to the listed property. Finally, our clients have quick access to the details around the most recent sale of the subject property. We believe all these elements are equally important. However, as opposed to Zillow, Homekeys is a Real Estate corporation operating in 67 counties in the State of Florida. That means that our agents are in face to face discussions with our clients. Our role is to assit the client in the interpretation of the information that is currently available to them in our site as well as other sites. Will be happy to discuss with you in further details.
Best
Marvin,
Ha Ha! I know better than to comment on the accuracy of list prices but no, they don’t go into Zestimate calculations (sales do.) We use the listing’s facts – beds, baths, square feet – to update the database of public tax records. Although public records are a pretty good starting point, a listing is the most current, complete and accurate source of these core home facts for many homes.
Manuel –
If you ever need estimates beyond Florida (or mortgage rates and estimates), please consider using Zillow API’s … http://www.zillow.com/howto/api/APIOverview.htm
Marvin –
PS – Check out this plugin to allow your commenters to subscribe to new comments on posts that they’re following: http://wordpress.org/extend/plugins/subscribe-to-comments/
David, Thanks for the info on the plug-in.
David,
Zillow does not allow anyone to store Zestimates or to create a public-facing derivative work with a Zestimate. Therefore, ValueSearch could not be implemented by any 3rd party website using Zestimates or the API. Is this a policy that Zillow is looking to change?
Like you said marvin, nothing beats an experienced agent on the ground that understands the local market.
Rob, these guesstimates are fine for overall market trends, but horrific for the individual home value. Thanks for reading!