Oh, no, Zillow...

I love the Internet. I really do. 
And in my many years as a licensed Realtor, there has been no better tool to come about for everyone involved in buying or selling a home or a piece of property.

It can help market properties at an extremely reasonable cost, works to generate business, speeds up the closing of a transaction, and overall, it produces a much more informed and prepared consumer. But the Internet can also be a source of confusion for the general public. Unfortunately, all of the wonderful value calculating widgets and apps developed by software gurus and marketing geniuses often fail at one thing: Recognizing the "soft" criteria that contribute to determining true value of a subject property--What you will have to pay to get it, and what you will really be able to sell it for.

When it comes to the valuation process, many of these generators swing and miss because soft information is simply not database consumable. Price setting and valuation is a gray area to begin with, but these sites can't pick up on improvements, renovations, and proper accounting for local comparables that are foreclosures or short sales. They also can't take into account true square footage--Ever looked at public records? They are often incorrect, both ways. All of this and more is taken into account with adjustments by a Realtor or experienced Appraiser, and of course, matters quite a bit to a Buyer that sees value in the complete package. Curb appeal, for example, which is proven time and time again to yield higher offers by Buyers who just "get that feeling this is the one," can't be easily calculated to begin with, let alone by a formula. These tools also do not trend as effectively as the real world does. For example, in a Spring market, (traditionally) values tend to increase based upon an influx of buyers and transactions--And the fact that people buy emotionally and tend to descend upon a marketplace in greater numbers at that time, year after year. Everyone knows demand drives values up, and those swings can happen pretty quickly in a local setting (for example, in a "prime" neighborhood without any other available inventory, or on a certain street)--The price fluctuation will have happened well before the aged closing data from the past few weeks catches up to the database. The bottom line is that arriving at the true market value of a property is a far more complex process than a few clicks would suggest (and any appraiser can attest to that fact, as their job is extremely technical and time consuming when done correctly). These instant gratification tools are based on algorithms and data sets that simply cannot interpret the three-dimensional reality of value. 

The outcome of hard data only generators often leads consumers blazing into my world with figures and estimates that are often way out of line with the realities of the marketplace--Again, what someone would (and will) actually pay for a property. I want all of my Buyers to feel like they paid a fair price for a property (even got a great deal whenever possible, if there are no competing offers), and were not taken advantage of. And I want my Sellers to have a realistic picture of what their home will really sell for and not feel as if I took them to market too low, or counseled them to accept an offer that was lower than what the market should really bear. It goes without saying, but I always have the best of intentions when it comes to my clients. I do the great majority of my business from referrals--and you can't continue to receive those important nods unless folks are left with an overall feeling that you know what you are doing and that they would use you again themselves. 

But at the end of the day, when the results of my data collection efforts and educated market interpretations are not exactly in line with something like Zillow or Trulia, if my clients do not trust my judgment and expertise as someone who has additional soft data to put in play, it can work to erode the trust factor. It puts a subtle (or not so subtle) question mark in the mind of a client. In a digital world like ours where there are so many readily accessible real estate (and Realtor) horror stories and messages of caution, it is difficult to set a client's mind at ease that your figures are likely more correct than what pops up in seconds on a valuation site.

So the moral of the story is that the Internet-powered valuation engines are great to get a general ballpark idea of what a home might be worth, or what you may be able to sell your home for. But take the results with a grain of salt--Your best bet to determine value is still going to be with a qualified Realtor or Appraiser, not a machine. Have a property you would like me to take a look at, and put Zillow or Trulia to the test? Reach out to me anytime at kristi@frederickareahomes.com.