Of Course It’s True, I Saw It Online!

 On May 15 I wrote a post called Technology For Real Estate in which I announced that I had just started a new website provided by a local company that had a product who’s property valuation technology was state of the art and was supposedly far superior to all of the others. Several other agents in my office bought into the same system and after nearly 3 months I’m here to tell you that, in all honesty, that property valuation technology pretty much stinks. In one classic story, a client of a friend of mine in my office called and was all excited because he had discovered that the house he had paid slightly over one million dollars for 18 months ago was now worth $1.2mil. He was ready to sell! My friend studied the comps and told him there was no way he was going to get anywhere near $1.2mil. 

“Who gave you the idea your house is worth $1.2mil?” She asked.

“You did!” the client replied. Her website’s property valuation technology had told him the high number!

 I’m really not trying to pick on the company I signed up with…the fact of the matter is all of these websites featuring instant home evaluations are extremely dubious. I think they’re correct only a small percentage of the time. Here’s some examples locally: 704 Cayman is in escrow with a list price of $1,598,000. Zillow has it at $1,360,000. 321 Bowfin is in escrow with a list price of $1,468,000. Zillow has it at $1,219,000. One of my recent favorites, 1410 St. Kitts is in escrow listed for $1,349,000. Zillow has it at $1,218,000. Last but not least, 897 Lurline is in escrow listed at $999,888. Zillow has it at $1,039,500. These are houses that have sold…they’re not pie in the sky listings with outlandish expectations. Secondly, the mistakes happen in both too high and too low fashion.

There are just too many variables for the valuation algorythms to pick up. In one case I know of in San Carlos an estimate shows a house I sold in 2004 to have less value than it did then. What it doesn’t realize is that the two houses that sold with low prices on that street in the last 3 months were fixer uppers with no view. It has no ability to understand comparables because “instant” is it’s highest value. I think it’s important to understand that many of these sites are “lead capture” systems and seller information is sold to Realtors…and the promise of home valuations is just bait. It always amuses me that many of the agents I see on some of these sites identified as “local experts” have in fact never even sold a home in this area. I know because I’ve checked them out in the MLS database. 

There are so many, many separate variables that add up to value in a home. It often takes alot of detailed analysis, and/or alot of experience in a very small geographic niche to comprehend a properties true worth. It just doesn’t happen with one short “click”.

Comments

  1. Jim, You’ll laugh at this, but, here is my take on it. Do you remember when they told Realtors, oh, the internet will replace you. People can buy homes online and do not need you anymore, it’s coming! That was when Realtor.com first hit the internet, many years ago. I was one of the first Realtors, in Connecticut, to sign up and have a showcase page on the site. Then, we had to pay to have photos of our listings and ourselves on the site. I thought it was awesome, the thought of people looking at my listings 24-7 made me ecstatic! Agents thought I had really lost it.

    Now, think how the appraisers must feel when they see these internet sites. Of course, the information is not accurate. You need a licensed professional to place value on a property. In fact, you need two professionals, a Realtor to guide you through the house selling maze and an appraiser to provide accurate value of the property. The internet is a way to connect with the consumer instead of the phone or door knocking. I love it!

  2. Patrick Au-Yeung says:

    technology is a wonderful thing, if used properly it helps both sellers and buyers make informed decisions. like any technology, the internet’s power is limited by how the data is interpreted. the internet is not artificial intelligence. in fact, most of the time it’s not even intelligent. it does, however, democratizes the process for all parties involved. we can all be more educated, connected and thus make better choices.

    technology is not the blame. people are.

  3. I was searching for Blogs about online home estate appraiser and found this site. I am interested in your content and appreciate sites like this. Gulf to Bay Appraisals

Speak Your Mind

*