Recently, I had a client call me and ask, “How good are those online values from websites like Zillow?” He explained that he had punched in his Happy Valley, Oregon address on Zillow and the same address on another site and the values were $270k and $316k. I laughed and explained that $270k to $316k is a pretty wide range and it suggests that these sites are at least that bad at estimating value. The actual value may not even be within the range the Automated Valuation Models (AVMs) provided. Here is a link to Zillow's own report card. It shows that, Zillow is more than 10% off about 30% of the time.
AVMs have the following problems:
1. AVMs cannot judge the condition of a property. An appraiser walks thru and views the subject in the same way a potential buyer would. The appraiser drives by and views comparables from the street, looks at listing photos, reads listings narration, and interviews parties involved.
2. AVMs are based on information that is often incorrect or incomplete.
a. County records information about square footage is often incorrect, see my sketching service.
b. County records in Oregon and Washing do not disclose concessions paid by the seller to the buyer at the time of sale. See my blog post Importance of Data Verification.
c. County records do not distinguish between popularity of styles, floor plans, and/or quality of finishes.
d. County records do not distinguish between views.
e. County records do not always show all parcels that were included in a sale.
If you’re just looking for a toy, AVMs are a great source of fun. If you’re looking for a value that can be relied upon, contact us. We may have a low cost appraisal option to suit your needs.