News
December 16, 2018

Rely on professionals when asking, “What’s my Home Worth” 

By AARON TAYLOR

The first thing most homeowners who are thinking about selling ask is “what’s my home worth?” 


Aaron Taylor
2018 NETAR President

What they should focus on is the accuracy of a current fair market value estimate. The actual fair market value is determined when the property is sold.

Fair market value is defined as "the price a buyer will pay, and a seller will accept under reasonable and ordinary conditions."  This definition assumes neither is under pressure to complete the transaction. 

What many consumers most often see is home value estimates based on automated valuation models (AVMs). They are spit out by algorhythms that have varying levels of accuracy. Some are pretty good, others are simply inaccurate. But they are not substitutes for the competitive markets analysis (CMA) by local Realtors® that consider unique qualities of a home, neighborhood and local market.  

Still, a working knowledge of the AVMs that are out there is helpful to put them in the proper context, according to the National Association of Realtors® Economists Blog.

Some of the most common are:

- Realtors Property Resource® has two home value estimates, their AVM and the Realtors Valuation Model® (RVM®). The difference is the RVM® uses the same data as the AVM plus Multiple Listing Service (MLS) Data. Both AVM and RVM® show the accuracy level of the estimate by giving estimate ranges and confidence scores. This resource is available for Realtors® only and allows a significant amount of expert customization.

 

- Realtor.com® uses tax assessment records, recent sale prices of comparable properties, and other factors to estimate home values. It’s free and publicly available.

 

- Homes.com’s estimate mainly uses public records. They test and benchmark the accuracy of their estimates. This estimate is free and publicly available.

 

- Zillow’s Zestimate is computed using public and user-submitted data. Estimates have different accuracy levels depending on the data of the property and location.  In many non-metro areas it has a plus, minus range of up to 25%. It’s free and publicly available.

 

- Trulia’s estimate is very similar to the zestimate since it is part of the Zillow Group.

 

There are also websites that provide home value estimates by request or estimates using user input, according to the NAR economists. They include ForSaleByOwner.com, GuaranteedSale.com HomeFacts.com, HomeValues.com. Some banking and financial institutions like Chase Bank, Bank of America, The Federal Housing Finance Agency and others provide estimates with their other services. And there are data companies like Attom Data Solutions and CoreLogic that market propriety AVMs.

 A local competitive market analysis done by local Realtors® typically have a higher reliability factor.

The gold-standard lenders use for most loans is the appraisal.

An appraisal is a detailed assessment performed by an independent professional appraiser.   It should include a physical inspection of the property, verification data through public records, an analysis of general market data, and the application of a valuation approach that is carried out according to professional practice guidelines. Lenders can use valuations in the place of appraisals for some deals that meet specific requirements.

 

 

 

 

 

 

 

 

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