Recently I searched one of my Real Estate Listings on the internet to see what various “valuation” sites were saying about it.
The property, a bank owned home in a neighborhood which once commanded sales prices as high as 1.3 million, is listed between $770,000 and $790,000.
Based on a recent Broker’s Price Opinion (BPO) I prepared for the Asset Manager I requested that the price be reduced to between $735,000 and $745,000.
My BPO was based on several factors
· 17 years experience as a full-time, professional Real Estate Salesperson · I had viewed nearly every property for sale in the development in the last year · Comparables used in my BPO had sold less than 90 days ago · Feedback from Buyers and their Agents who had visited the property · General Economic statistics and news recently published in various media
My goal for preparing the BPO was to have the Asset Manager reduce the asking price, theoretically making it easier to sell, but at all times I exercised Fiduciary Responsibility to my Seller, strived to be as accurate as possible, and to best serve the neighborhood, the home buying public and my peers.
After my BPO was complete I was curious to see how close my analysis came to the easily found valuations on the Internet.
Zillow, a site I had already seen state wildly inaccurate information “Zestimated” the value at $661,900. Zillow referred me to Foreclosure.com which on the same day valued the property (as a “Zestimate”) at $848,000, a difference of 22% ($186,100). On Zillow there were no direct comparables sited and on Foreclosure.com the comparables only showed the number of Bedrooms and Baths – not nearly enough data to reasonably compare homes in this area
I checked Remax.com and they did a much better job of describing the variables they used, citing data such as square footage and year built, and their valuation range was from $650,000 to 725,000 – more accurate but still below the current market value.
I sought out information from several other sites, such as Online Home Values, My Home Worth, Get My Homes Value, and Estimate Value but each of these sites required me to disclosure my email and phone number and I was not comfortable searching without anonymity so I did not proceed to a final valuation on those sites.
Based on this analysis, and previous searches which also resulted in unreasonable valuations, I ask you, “How can these “valuations” possibly serve the best interest of the home buying and selling public?”
On a home by home basis they do a huge disservice to the Buyers and Sellers navigating their way through what is hopefully the bottom of this Real Estate cycle.
Buyers and Sellers, armed with this and other inaccurate information sourced on the internet, come to Real Estate professionals with expectations out of sync with the actual market dynamics and reality. Frequently Buyers expect me to write “low-ball” offers which insult the Seller and are generally rejected without any further negotiations. Even if the Buyer and Seller do come to terms then one or both sides sometimes end up feeling cheated because the Buyer feels like they paid too much and the Seller feels like they settled for too little.
What’s the solution?
First, I believe these sites should more boldly state their innate inaccuracies, second the Media should discontinue quoting the statistics from these sites and third, Real Estate Professionals should be very familiar with these sites and be able to explain the errors.
Real Estate Salespeople already have an uphill battle to prove to our Clients that we work, think and perform as professionals and these websites are making that so much more difficult.