By Shayla Mars  Fri Jan 24, 2014

Online Home-Price Estimators: Take It With a Grain of Salt

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The exponential growth of technology has benefited the housing industry in many ways—you can look up homes for sale without buying a newspaper; take a virtual tour of an open house; even find out what your neighbor may have paid for their home without asking them. Property websites have enabled buyers, sellers, renters and owners to easily manage their housing affairs. Online home-price estimators have aided homeowners in valuing their homes. Online home-price estimators may be quick and free but getting an accurate estimate isn’t perfect science.

Not-so-weird science

A number of sites, such as Zillow.com, Eppraisal.com and Truila.com, offer free home-price estimators. These estimators are simple and generic. All you have to do is enter your full address. In order to estimate the value of your home, the estimators pull data from public records that include facts about your home and other homes in the area; it runs that information through its program. Each site does not use the same program design (or informational sources), so the value you get may vary widely. A wide range of estimates are produced because the computer is using an “automated valuation model” in order to examine the copious amounts of data it is collecting about your home and the geographical area surrounding it.

Depending on each sites’ methodologies, some factors may different from others, therefore creating multiple estimates for your home. For example, one estimator may pull data from a source that lists the average pricing in your area at $300,000 and another estimator may pull data from a source estimating $200,000.

Coming up short

Market trends, property history, property taxes, recent sales and the size of your home (when it was first built) are some of the information online home-price estimators use when determining the value of your home. What most estimators don’t take into account are any additions or renovations you’ve made to your home. There are some sites that will allow you to input specifics about your home in order to give you a more accurate evaluation. The estimator also doesn’t take into account the condition of your home. Remember, the estimators are using public records as a source of information. If your home has major problems such as uneven floors, extensive weather damage or just plain wear and tear, it will not be reflected in the estimate. It is also unclear how often each site updates their data. Zillow.com, for example, updates its data three times a week. With sales happening everyday and a volatile housing market, estimates can easily jump around.

Take it with a grain of salt

Online home-price estimators annoy some real estate agents, because they give sellers unrealistic expectations about their homes. Some estimators can over-value your home while others might under-value it. It’s important to keep in mind that it is an “estimate” not a solid price. The value you receive should give you a general idea of how to price your home if you plan on selling or refinancing. Given that the information is automated, you can type in an address for a building that is boarded up or even torn down. If there aren’t any public records that accurately reflect the property, the estimator can still generate a value for it.

If you really want to know the true value of your house, you should hire a professional appraiser to come by your home. Taking out a second mortgage, for instance, requires more than just an automated estimation of your home’s value. A professional needs to appraise it. Click here to learn the stages of securing a home equity line of credit for refinancing your mortgage.

For the best home equity line of credit rates, go to My Bank Tracker’s HELOC page.

 

Related Stories:

What is a Home Equity Loan?

Home Values Down but Inching Up from Recession Levels

7 Ways to Sabotage Your Refinanced Mortgage

 

 

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