“Automated estimates” of home values are often very wrong. In fact, according to the Wall Street Journal, valuations that are 20% or even 50% higher (or lower) than a property's eventual sale price are not uncommon. Rely on them and you might overprice your house, causing it not to sell. Or you might under price it, and not get the fair market value. 

Take a look at the chart below, which shows recent Roanoke, VA area sales and the corresponding automated online estimates.

The chart shows real figures for actual sales, but I blurred the addresses because my purpose is not to start discussion about a particular property. The homes in the chart are all in the Roanoke, VA area and were picked at random from recent sales reported by the MLS.

Home sellers might dramatically miss the mark when attempting to price their house using home value websites. One key factor in pricing that online estimates tend to ignore is “property condition.” The computer doesn't know that you tore out the old Formica counter tops and replaced them with granite, or that the shag carpets are now gleaming hardwood floors.

Guesstimating prices not only affects home sellers, but buyers as well. Many times, I've heard agents say that buyers have lost a home they loved, after making a dramatically low offer which was based on an “internet value.” Certainly some of the online values are correct, but there is no way to know which ones without consulting a real estate agent or appraiser familiar with that particular market.

Zillow, to its credit, advises buyers and sellers to consult an agent on pricing.

 “We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

·         Getting a comparative market analysis (CMA) from a real estate agent

·         Getting an appraisal from a professional appraiser

·         Visiting the house (whenever possible)”

Without the human element, it is extremely difficult to accurately price a home. As an experiment, I ran my own home through a few online sites and the opinion of value varied by more than $25,000. That would be a lot to lose by relying on incomplete information. 

Needless to say, I strongly recommend consulting a real estate professional before using internet pricing.  If you're in Roanoke, VA, we'd be happy to help you, but wherever you are, KEEP CALM and let an agent price your home!