After noticing a for sale sign in front of your neighbor’s house, or receiving a real estate postcard with details about local listings, you might be left curious about your own home’s value. Rationalizing that you’re just curious, you decide to go online to one of the many real estate apps that offer home value estimates. In most cases, the estimate that you receive will be far from accurate.
If you stop to think about it, it makes perfect sense. A computer algorithm will look at things such as room counts and square footage, and then apply the average figures for the city your home is in, to come up with results. This might result in an accurate figure if you live in a newer tract home, in an area without much variation. If you have a custom home, or a customized home in a community with a lot of variables (like most of the Bay Area), the accuracy quickly drops. It’s all about the human factor.
A computer algorithm doesn’t know that you live on the “view” side of the street, or that you have gorgeous landscape…well beyond the average in your neighborhood. It doesn’t know that you invested over $500k in recent remodeling. It also doesn’t know if the end result of that remodel was fantastic, or fatally unappealing. The algorithm doesn’t know that your neighbor’s house that recently sold had foundation issues, water damage or a severe odor problem. It doesn’t factor in a dreamy setting and location, versus backing up to a major thoroughfare. The algorithm doesn’t understand that some neighborhoods as a
whole, always command a premium price, while some other neighborhoods are far less appealing and sell for less.
You’re thinking yes, but why does it matter? I’m just curious and the online estimate should give a value that’s somewhere in the ballpark – right? I recently completed a home valuation for a Danville homeowner who was curious. My evaluation showed a home value of approximately $3,350,000. The homeowner told me that the online estimate she’d recently pulled up showed a value around $2,300,000 – approximately 34% lower and a difference of over $1,000,000. This matters in many different situations. Estate planning, investment and insurance decisions are just a few.
When is a bad online estimate the most concerning? I’ve mentioned it before.
Beware of unsolicited offers to purchase your property, especially if you’ve owned it for a very long time. As homeowners, we receive those letters in the mail and unwanted phone calls, all the time. An offer to buy your house with no hassles and no fees. Imagine an elderly homeowner who bought their home in the 1970’s, for $40k, receives an offer of $2,000,000, and they’re excited. Their daughter who lives out of the area hears about this and rightfully being cautious, goes online for an estimate. The estimate comes in pretty close to the offer and the homeowner decides to accept it. If we look back at the prior example with an expert, in person evaluation, this home seller may have just left $1,000,000 on the table. There is a reason that the unsolicited offers come to you. It’s a numbers game and the buyer only needs to find one unsuspecting home owner, where they can make a huge profit.
If you are curious about the value of your home, please reach out to your trusted REALTOR®. We are always happy to help! Ideally, make sure that you’re speaking with an experienced, local expert. Getting an estimate from someone who understands the nuances of your neighborhood and who has actually visited the homes that have sold is critical. Every home is unique. Please feel free to reach out to me at 925-964-5010 or via email at Lisa.Hopkins@Compass.com. Even if you’re not planning a move, I’m happy to help by providing you with relevant data, enabling you to make a well informed decision. It’s never too early to start planning for success.
