Thursday, March 31, 2016

A Warning About Home Valuation Reports - Not An April Fools!

Not a week goes by that I don't hear from a buyer or seller insisting that a property is worth a different amount than how the bank's appraised it. I get it:  everyone wants to gain the most value from their transaction... so why do the home valuation sites tend to get it so wrong? 

Here's why:  they don't see the whole picture. 

It's the real estate equivalent of looking at an iceberg from the surface.

To truly understand the value of a home requires more than just knowing the number of bedrooms, baths, and square footage. To get the full picture, you need the advice of a real estate professional.

Essentially, if you think accuracy is important, you need to know the difference between an AVM and a BPO: 

Automated Valuation Method (AVM) - Essentially, it's software that reaches out for publically available data and then uses that data to offer a suggested value. This is what Zillow's popular Zestimate is - a quick result produced by software that can't see the whole picture. 

Broker Price Opinion (BPO) - Real estate agents perform a BPO when needing to come up with a listing price and is a much more manual process. Here, the real estate professional who knows, works and likely lives in the area, uses their actual brain to improve upon the data provided by an AVM. A BPO allows us to take into consideration what we know to be true about intangible values like good design and tasteful upgrades -- stuff that requires human understanding in order to derive a meaningful conclusion.

The bottom line is that AVM's are fine until you're serious about buying or selling:  heck, I even offer one on my website Then, it's time to call your local real estate professional (yep, I'm talking about me). Do you know anyone that would like to know what their home is actually worth? I can help. 

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