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Health & Fitness

Online Home Value Estimates: Misleading?

Online home valuation algorithms can be misleading due to lack of personal knowledge of the market.

Didn’t your mother tell you not to believe everything you read? Well, this applies to some of the most popular algorithm home valuation websites. How so?

Many of the popular online real estate sites such as Zillow can be very misleading.  Even according to its own publications they can be off by 20 percent. 

Log on to Zillow and read its blog and you will see it is full of examples of valuations that are way off for many reasons. These sites often pull in “comps” from different but adjacent tracts of homes, which grossly misrepresent a value either to the high or low side.

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In many cases, knowing what the real story is behind closed listings is essential. In many cases the neighbors know the real story, as well. For example, why does a 2,100-square-foot home sell for more money than a home 400 square feet larger on the same street? The valuation algorithm will not know that the larger home had multiple slab leaks and was a property that was uninhabitable. In other words it had to sell to a cash buyer at a substantial discount because no lender would loan on the property.

In other scenarios, some short sales sell at market value even though they are sold “as-is” with no warranty, while other short sales sell at substantial discounts because the banks want to unload them from inventory. 

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While it is great to have so much free information online, it can be confusing and lead to a buyer rejecting a well-priced property for a faulty reason. When looking for a home, make sure the information you have is meaningful!

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