Automated Home Values, Assessed Value, Fair Market Values and Appraisals... Which One Matters?

Zestimates and automated valuations, are they accurate?

By Emilio DiSpirito
401-359-2338 Top Rhode Island Realtor

The Zestimate is an algorithm designed by Zillow, a consumer real estate search portal, that was created to give homeowners and buyers automated valuations on real estate. Often times, you will see for sale by owner listings on Zillow with the exact same number as this computer generated amount.

I have to say, it is still in nearly all cases far from accurate. I do believe one-day technology will come to a point where online values will be more accurate. For the foreseeable future, this will not be a credible source.

There is ONLY one number that sellers should be concerned with and that is the appraised value of their home! An appraisal is the best measure of what a home is worth and is performed by a licensed appraiser who aside from pulling comparable recent solds in the local market, picks homes on dozens of other parameters such as condition, layout, amenities, specific location which includes lot and surroundings, finishes, etc.

When looking to list your home for sale, I do not recommend always hiring an appraiser. Appraisals, and rightfully so, can cost between $350 and $600 for most residential applications. Consulting with a Realtor who has extensive market knowledge and area sales is the absolute best practice for finding not only what your home is worth today, but your homes projected value and what it may sell for "tomorrow". Nearly all real estate agents will provide this as a complimentary service, in efforts to assist homeowners in exploring if now is the proper time to sell.

Other types of home valuations:

• Assessed Value - Is the estimated home value of your property when compared to comparable sales in your municipality. This value is then multiplied by the "mil rate" in which the town sets in order to run many aspects of the town such as local government expenses, schools, libraries, police, fire, etc. Assessed value in a seller's market is often lower, as the values trail a year or 2 behind the market. 
• A great idea when having a Realtor price your property is to see where the median home sale is percentage wise of the median assessed value in your area!! It's a great way to cross-check your home's fair market value in many cases!! 
• Fair Market Value - Is the value set by the market. There is no argument to be had that comparable sales, local market conditions, overall home and site condition, as well as supply and demand, will set this value. Pricing your home at or just a hair above (1% to 3% depending on demand), will allow your property to sell in a faster timeframe as well as higher in price. 
• Properties that sit on the market will sell for less. Buyers either know its overpriced or begin to wonder what is wrong with the property. 
• "Here Say Pricing" - When a contractor, neighbor, friend that purchased a year ago or someone outside of the industry gives you unqualified information on housing prices. Do not base your decision on placing an offer on a home or price to list a home by what the mailman says. You will lose. 

Sellers in Rhode Island & Massachusetts can click my website and a top local agent from my team will assist you in getting your homes fair market value. www.MyDreamHomeNow.com/sell

For more information, catch my show each Sunday at 10 am on Newsradio 920! www.TheRoundTableRadio.com