How to Determine Market Value: Online Estimates vs Home Valuation
Wondering how to determine market value of your Seattle area home? Click here to learn why online “estimates” aren’t as good as personalized home valuation.
The United States housing market is still hot. In the 12-month period starting in June 2017, house prices increased 6.3 percent.
This significant price increase shows that it’s a seller’s market and now is the time to take advantage. Considering this, the next question every seller wants to know is how much can they get for their house.
To answer this question, many sellers turn to online home valuation tools. However, these online tools are inaccurate and highly unreliable.
Read on if you want to learn more about how to determine market value. This article will demonstrate that personalized home valuations are more accurate than online tools.
How Do Online Home Valuations Work?
Online estimating tools are typically based on statistical models. The model seeks a variety of inputs that are used as the independent variables in the estimate.
The most important of the variables is the home’s location. Each location has a different set of home values that are drawn from in the estimate.
The online tool will then ask for details about your home such as square footage and the number of bedrooms. The estimating analysis may inquire whether the property is fenced, has air conditioning, or a finished basement.
Using these inputs, the estimating tool will provide the user with a range of values. This tells the seller what the lowest and highest likely sales price is for the home.
What Are the Weaknesses of an Online Home Valuation?
For starters, online valuation tools have a substantial error rate. In one notable example, the median error rate in the Miami, FL, was nearly 9 percent. For many sales, the error rate was up to 20 percent.
The reality is that these estimating tools do not consider qualitative criteria or economic variables. The condition of the home, for example, is not considered in any online tool. A well-manicured home that is move-in ready is considered equal to dirty homes so long as the square footage is similar.
Online tools are rarely current and do not take into consideration the supply and demand in the local market. They also cannot capture the willingness of a motivated buyer to overpay for a house they desperately want.
What Is the Solution?
A personalized assessment is still the most accurate method to gauge home value. The reason is that an in-person assessment overcomes the issues outlined above.
First, a personalized home assessment considers the current local market. Next, an in-person evaluation takes into consideration a home’s character and upkeep.
At the same time, personalized home assessments still use a data-centered approach to estimate home value. This means it takes the best feature of an online estimate but makes adjustments that online tools are incapable of making.
How to Determine Market Value – Wrapping It Up
Online tools are useful for a ballpark estimate on how much your home is worth. However, if you are a serious seller, it is recommended to get a personalized home assessment instead.
Personalized valuations are more accurate as they take into consideration factors that online tools are incapable of evaluating. If you want to learn more about how to determine market value, please contact us for assistance or request your free home valuation.