If you are thinking of selling your home or are just curious about the value you may have come across websites like Zillow, Trulia and StreetScout. These websites provide you with an “estimate” of value. Many clients ask about the reliability of these estimates of these sites and others providing a similar service. Home sellers should be aware of a few attributes that all these sites share.
These websites have a complex set of algorithms that crawl over the public tax database for past sales and compile a value based on those sales. If you consistently check your homes value, let’s say once a month, you may notice a swing in value. The older, more unique and custom home areas will have greater swings. The neighborhoods with a set amount of floor plans and similar lots will tend to be more accurate.
This fluctuation is caused by a few things. The first is in areas like South Scottsdale and Central Phoenix all the homes were very similar when they were built decades ago. However, over the years some these homes have been drastically altered or even torn down and rebuilt. Valuation websites have a hard time distinguishing between a 2500 square foot home that is in need of serious repair and a 3000 square foot home that has been completely remodeled. To over simplify, these sites just can’t see.
It does not take long for values to get a little screwy. “Newer” areas like Scottsdale’s DC Ranch and Grayhawk have had this happen. Homeowners who have remodeled kitchens and bathrooms and built outstanding outdoor entertaining areas are sometimes floored that their values are similar to their neighbors in its original condition.
Location can also be a factor. The websites providing value do not take location into consideration. This can be seen in areas like McCormick Ranch and Paradise Valley where some homes back busy roads like Hayden and Shea Blvd. Homes backing busy thoroughfares certainly take a hit in value in a buyer’s eyes but can be left out in a free estimate.
Inventory is not taken into consideration by algorithms. StreetScout is the exception. StreetScout is tied to the Cromford report which does factor in days on the market and inventory levels. If a home is the only home on the market in a hot neighborhood, it may get a better price. If the market has a ton of inventory setting for months a seller may need to price very aggressive to get it sold.
With all that being said these valuations need to be taken seriously for a home seller. Many buyers take these evaluations seriously. Some websites allow a homeowner or a homeowner’s agent adjust features of a property to gain a more realistic expected sale price. Sellers and their agent need to be aware of these values and ready to justify their difference of opinion. As many times as the value is low it can also be high. This is very good opportunity for the owner to undercut the valuation and put themselves in a very competitive position.
To get a better idea of value, ask an agent for a range a home may sell without looking at the home. Then have the agent view the home, consult on what can be done to maximize the sales price, update you on your neighborhood’s market condition and give you a more accurate estimate of sale price.
If you are thinking of selling your home and would like a price range or a full consultation feel free to text, call or email. 602-570-5905 jschloz@gmail.com
