It’s so tempting to take the perceived easy way to price real estate, especially when so many “real estate” websites claim they have the inside information to pricing property. Using “complicated” and “proprietary” formulas and calculations these sites claim to help homeowners determine accurate property values. While it seems to be accurate these so called “estimates” are often inaccurate compared to current market conditions.
According to one of the leading “real estate” websites, their estimate system is calculated from public and user submitted data. It is put into a computer program and out pops a price range with a high and low number. These “estimates” are then published for the public to see and use in property research. That sounds reasonable until you realize that this system is pricing property from the Atlantic to the Pacific – and everywhere else in between.
There is no way this system can price property in California and Virginia and expect to be accurate in both areas. These “real estate” websites even admit that to price homes on their sites they use a geographic area that is much larger than the neighborhood level.
These sites often rely on tax assessments to get a base price and this can be a problem for getting an accurate market price because tax assessments typically lag about 12 months behind the market value where sales prices are increasing or decreasing.
Here’s how home assessments are done for tax purposes:
- Home assessments are researched from July –December.
- New assessments are mailed in January. The homeowner has 6 months to challenge the new assessment.
- In July the assessments are made then effective…one year after research.
Additionally, the assessor rarely goes into the property for a visual inspection therefore the city assessment is not a true reflection of the property’s market value. The city does a relatively good assessment of the land value but misses the mark on the “improved property” (typically the house) assessment.
And these are the local assessors who are unable to go into individual homes. What about these computer models that tabulate estimated market values for across the country? If the local assessor is unable to take the time to see every single property and evaluate that way then how in the world could a computer do it, and do it accurately? Frankly it is a disservice to the consumer that these websites are allowed to claim they are “the starting point of a home’s true value.” These sites even say in their disclaimers that, “We encourage buyers, sellers, and homeowners to supplement information by doing other research.” The other research they suggest: getting a real estate agent to perform a comparative market analysis (CMA).
Instead of starting with this faulty system why not use a REALTOR© from the start?
So how do REALTORS© price property?
REALTORS© are searching current market conditions and pricing within the past 3-6 months and are projecting pricing trends going forward based on supply and demand forces in the local market place. REALTORS© has evaluated the current property condition and its impact on salability of the property. They take in account things like what the competition is doing, sales terms, and the way the market is trending, along with the location of the property. REALTORS© use a market area to compare prices that makes sense to the consumer and not based on the algorithm. REALTORS© tour competitive properties to see how they compare to your home and it is all of this data that goes into pricing property for the market.
There is not a good shortcut in properly pricing your home for the market. Instead start with a CMA from a Rose & Womble REALTOR© that also includes a strong marketing and negotiating plan.
Simply put there is no substitute for a properly done comparative market analysis when you are ready to price your property to sell or if you are planning to make an offer on a piece of property. Your Rose & Womble REALTOR© is a great local resource to properly price property.