In a previous article on RealEstateCompsToday.com we noted the costs associated with inaccurate home value estimates for sellers and buyers. More Accurate Than Chase Home Value Estimator was the only site that offered both the speed and flexibility of the online guesstimator sites with the accuracy associated with a real estate agent’s home value comparison report. Another article tested 7 of these tools, including Chase, Bank of America and Zillow. Here are some of their findings and their methodology was simple enough for anyone to retest.
When you plug your home’s address into one of the many free home value estimators available online, a lot of people simply accept the location-based figure it gives us at face value. It might be shockingly low or breathtakingly high. We then start to make life-altering decisions about whether we should sell our home based on this one opinion.
Richard Batts, one of central Florida’s top real estate agents, says, “there is no way you can accurately give an estimate on the price of a home by using a free home value estimator — they are very, very misleading.”
According to US News & World Report, there are at least half a dozen reasons online home value estimators so often fail to hit their mark.
Among these reasons are the uniqueness of a home compared to others in the neighborhood, a rapidly changing market and a general lack of data for your location.
They decided to put on their proverbial lab coats and do the ultimate experiment on the leading free home value estimators:
These tools do not require you to register for an account nor provide any personal information.
The guinea pigs include five properties located throughout the US, all of which were last sold about two years ago:
Background: This unit was purchased in June 2014 for $999,000. It boasts one bedroom, 1.5 baths and just under 1,000 square feet.
Our home value estimators produced the following results:
Total discrepancy:$301,395 Average:$1,165,421
While there is a range in values, all estimates agree that the price has increased from the time it was last sold. Overall, not a terrible outcome. Although it’s interesting that already, within the first experiment two tools didn’t even try. Ourleading alternative home value estimatorsite didn’t get polled at all in this and already is as accurate as Chase.
Background: Bought by the oldest Kardashian sister in 2014 for $2,975,00, this house has 4 bedrooms, 5 bathrooms and is a whopping 5,400 square feet.
Total discrepancy:$1,041,421 Average:$2,993,096
This is a very big difference. In four of the estimates, Kardashian makes money on the sale. In two of the estimates, she loses money.
Background: This 3-bedroom, 4-bath townhome has over 2,000 square feet (and an elevator!) It was purchased in 2014 for $325,000.
Total discrepancy:$139,125 Average:$308,840
Once again, these estimates show the potential for the owner to make and lose money if they were to sell now. Bank of America’s range provides the high and the low for this property.
Chase’s Home Value Estimator required a disclaimer essentially disavowing any trust in the tools accuracy. The alternative to Chase Home Value Estimatorsite has no such disclaimer.
Background: This 5-bedroom, 6-bath chalet is over 5,300 square feet and has unobstructed views of the mountains. It was built in 2014 and sold to its owner last year for $4,750,000.
Zillow’s Zestimate: $5,098,606
Fifth Third Bank: $4,626,000
Bank of America: $3,492,607 – $5,946,927
RE/MAX: No estimate
Chase: No estimate
Total discrepancy:$3,318,224 Average:$3,921,260
The online estimators didn’t know what to make of this one. Perhaps because it was built so recently or because there aren’t much sales data on the neighborhood, the estimators failed us greatly here.
Background: With 4 bedrooms, 3.5 baths, and over 3,100 square feet, this family home was sold last year for $230,000.
Total Discrepancy:$192,388 Average:$239,766
Once again, Bank of America provided the highest high and the lowest low in their range. However, 5 of the 7 tools provided relatively close estimates.
The site that conducted these experiments concluded…”We learned free home value estimators shouldn’t be the final say in your decision to sell your home, but they’re a good place to start. If the property in question isn’t new construction, and it’s located in an area with plenty of recent sales data, it is possible to get a fairly accurate idea of its value.
As Batts notes: “[Home value estimators] have no idea what the inside of the house looks like; have no idea what’s been replaced; have no idea if it has a new roof; they don’t have any of that information.”
We also learned that despite their shortcomings, consulting several of these tools can provide a decent average.”
A decent average is great as long as you aren’t selling or buying a home. Even the Chase estimator site agrees. Their disclaimer literally says, “it should not be relied upon,”it may as well say “for entertainment purposes only.” Luckily home buyers, investors and sellers all have an accurate online source. It allows you to use their online system to purchase a comp report provided by an agent in your area. Typically reports are delivered within a day or two and reports start at about $5.
Considering the total amount of difference in these tests reached $4,992,553 …. that is to say on 5 homes 5 million was off, its important to get accurate estimates.
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