Tag: home appraisal

The Pitfalls of Automated Home Values: Why They Often Get it Wrong

In today’s digital age, homeowners and prospective buyers have easy access to a wealth of information regarding real estate. Automated home valuation tools like Zillow’s Zestimate have become increasingly popular for estimating property values. However, these tools are far from infallible and often generate inaccurate estimates.

Sadly, most real estate consumers don’t understand this, leading to overpricing of homes.

In this blog post, we will explore why automated home values are frequently wrong and shed light on the factors on which websites like Zillow base their Zestimates.

Lack of human oversight

One of the primary reasons why automated home values often miss the mark is the absence of human oversight. These valuation tools rely on algorithms and data-driven models to estimate property values, disregarding the subjective factors that can significantly impact a home’s worth.

Automated systems often overlook the home’s unique features, renovations, neighborhood dynamics, and local market conditions. Consequently, this leads to inaccurate estimates, as algorithms fail to capture the full complexity of the housing market.

Insufficient data accuracy and completeness

Automated home valuation tools rely on vast amounts of data to generate estimates. Websites like Zillow aggregate data from various sources, including public records, tax assessments, and previous sales data. However, the accuracy and completeness of this data are not always guaranteed.

The most reliable information comes from an area’s Multiple Listing Service, to which Zillow doesn’t subscribe. Instead, the company relies on information submitted by real estate agents across the country, but not all real estate agents advertise on Zillow. Therefore, the important stuff doesn’t make it into the automated home value.

Then, there are real estate agents (who are required by their MLS to update their listings on that platform within a certain time period) who aren’t held to the same stringent rules.

They often neglect to update listing information on automated home value websites, causing information to become outdated. There’s nothing more frustrating than finding your dream home for sale on Zillow only to learn that it sold a week ago.

Inability to account for unique features and upgrades

Automated valuation tools struggle to account for the unique features and upgrades that differentiate one property from another. This is something a professional appraiser will not miss, by the way.

They often rely on general characteristics of similar homes in the area, failing to consider specific details that can significantly impact a property’s value. Features like a remodeled kitchen, a swimming pool, or a picturesque view can dramatically affect a home’s worth but are challenging for automated systems to accurately assess. Consequently, these tools may undervalue or overvalue a property, leading to misleading estimates.

Ignoring local market dynamics

Real estate markets are dynamic and can vary significantly from one location to another. Automated valuation tools, however, often fail to consider the intricacies of local markets.

They rely on broader market trends and regional averages, which may not accurately reflect the nuances of a specific neighborhood or city. Factors like school district quality, nearby amenities, transportation infrastructure, and local economic conditions can all influence property values, but they are difficult for automated systems to incorporate.

Consequently, estimates may not align with the reality of the local market, leading to erroneous valuations.

Lack of contextual understanding

Another inherent limitation of automated home valuation tools is their inability to accurately comprehend a property’s context. They fail to consider subjective factors such as curb appeal, architectural style, and overall condition.

The emotional appeal of a property, which can significantly impact its value, is challenging for algorithms to gauge. On the other hand, human appraisers can and do, recognize and factor in these nuanced elements when determining a property’s worth, providing a more comprehensive and accurate assessment.

While automated home valuation tools offer convenience and quick estimates, they are prone to significant inaccuracies.

It is crucial for homeowners and prospective buyers to approach automated home values with caution and rely on them as a starting point rather than a definitive measure of a property’s worth. For a more accurate appraisal, engaging the services of a local real estate agent is important if you hope to obtain the most money possible for your home.

How pets can impact your home’s value

I once listed the home of a lovely woman who lived with the love-of-her-life, a young pit-bull, Jade.

Like most puppies, Jade had penchant for chewing – on EVERYTHING. My client came home from work one day to find her living room completely destroyed. The dog had torn the sofa to shreds – even the wood frame. The floor was a sea of shredded foam and chewed-up wood.

The dog had also taken a dislike to the baseboards and decided they had to go as well. Thankfully there were no showings that day and it took almost two weeks to get the unit back into showing condition (and a lock on the escape-artist dog’s crate).

Sure, this example is extreme, but pets damage homes, whether it’s the dark streak on a wall where they’ve rubbed themselves or cat urine in the carpet to even something as minor as hair everywhere. Pets can have a negative impact on your home’s value.

Other ways pets impact home value

Recently I read an interview with a Boston real estate agent who talked about selling a condo that belonged to a woman who owned multiple cats. It sold for $30,000 less than it should have because of the damage caused by her cats.

“When the damage is significant, however, a home could appraise at 2% to 5% less” than market value, appraiser Susan Martins-Phipps tells Beth DeCarbo at the Wall Street Journal.

Then there was an article in Business Insider that claims home values in a neighborhood with barking dogs are reduced between five and 10 percent. So not only might your pet bring down your home’s value, but your neighbor’s pets may impact it as well.

How to deal with existing and future impacts

Of course, you’ll need to repair pet damage before putting the home on the market. But you’ll also need to remove evidence of pets as well, such as hair, odors, stains, and pet paraphernalia, such as food dishes and litter boxes.

Urine in carpets is almost impossible to get out so you may want to think about replacing them. Painting the interior will get rid of rubbing marks on the walls and a lot of odor as well.

Here are a few other tips to ensure your home gives off a homey, not kennel vibes:

  • If pet odors are extra-heavy, consider hiring a professional to get rid of them.
  • Avoid the use of air fresheners, incense and scented candles. Certain scents can be turn-offs for some.
  • Keep your dog groomed during the marketing process.
  • Vacuum as often as possible.
  • Give your dog plenty of exercise and attention while the home is on the market. When he’s pooped out, he won’t be as likely to look for ways to beat boredom.
  • Don’t forget the backyard. If your pooch relieves herself there, you’ll need to ensure she hasn’t left any surprises for buyers who want to check out the area.

Finally, find a place to park the pets during showings. Ideally, that means removing them from the home. Park your pet at the groomer, drop it at the vet for a checkup, take it to doggie daycare, or hire a professional dog walker during showings and open houses.

Since it’s not always practical to remove the pet from the home, crate it, cover the crate with a blanket, and leave a note on the door that there are pets created in the room.