Learn about Computer Home Valuations
Computer Home Valuations
When many people are looking to either sell their home or even buy a home, they first go to the internet. They do this to try to find out what the value of a property is. However, this only works to a certain extent.
Other people try one of the services which does a computerized valuation of a property. But in fact, these rarely are correct.
Let me explain how these automated processes calculate a home’s value. They look at the subject property, and then look at the recently sold homes within a certain radius of that property. If the subject property and included houses were all the same, then you have a chance of being correct. For example, all homes are four bedroom Colonials between 2200 and 2400 square feet. However, it’s just a chance because it does not take into account upgrades, condition of the property and much more.
Don’t Compare Apples to Oranges
But what if there are different type of properties in that radius? For example, what if the subject property is a 4000 square foot Colonial with 5 bedrooms, a 3 garage and a pool on a two acre lot? And, there’s a condo complex with two bedroom 1200 square foot condos within the specified radius of that property. How the computer algorithm works is it adds up the value of all the homes that sold within that radius. It will take the three $800,000, 4,000 square-foot Colonials that sold. Then it will take the seven $200,000 condos and add of the value of of all those homes together. They then divide by the number of the total properties that were in the equation. And the amount that the program says the home is worth?
In addition, each of the 1,200 square foot condos is also worth $380,00.
Recently, the chairman of a company that advertises computer estimates of property values sold his home. He sold his home for $1.05 million. His own company’s computer estimate showed a value of $1.75 million.
I think you can see that a computer algorithm does not give a true indication of what a 4000 square foot Colonial should be worth. In order to get a proper valuation of a property, the human touch is absolutely necessary. After all, an experienced Realtor who knows the area will not include those condos into the equation. The best way to get a proper valuation is to listen to what your Realtor says. Don’t believe what a computer says a property is worth just because a computer algorithm says it.
Are you ready to either buy or sell a home? Let us give you a proper valuation form an experienced Realtor. Contact us