Risks of Using Automated Valuation Models: Why Agents Are Still Your Best Bet
Is the popular internet automation for your home’s value costing you money?
How reliable is the Zestimate, and can you confidently use it to determine your home's value? Today, we address this question.
With the rise of the internet, finding information about your home's worth has become significantly easier than in the past. Automated valuation models (AVMs), like Zillow's Zestimate, and Redfin's Estimate are now widely available. These models aim to provide homeowners with an estimated value for their homes.
In the past, it was very difficult to get information about what your home might be worth because there was no internet or that information wasn't as readily available as it is today. We had to rely on a local appraiser or a local real estate professional, and the quality of that information depended on how good of a Realtor and appraiser you came upon.
It’s important to remember that these Automated Valuation Models are not as reliable as they might seem. Even Zillow's website admits that the Zestimate is just a starting point and should not be used as the sole source for determining a home's value. Instead, local appraisers and real estate professionals are the best sources of information for pricing your house accurately.
For example, Zillow states that their Zestimate has a 99% accuracy rate in Nevada, within 20% of the actual price. This means that if your house is worth $500,000, Zillow believes it will sell between $400,000 and $600,000, which is a broad range that might not be helpful when listing your property.
"Experts are the best sources of information for pricing your house accurately."
Using AVMs to price your property has risks. If you price your property too low, it might sell quickly, and you could lose money. On the other hand, if you price it too high, it may sit on the market and eventually sell for less than its actual value.
To mitigate these risks, reach out to us. We can assist you in determining the value of your home based on the most likely sales prices in the current market. Our approach is hands-on rather than relying on automated valuation models.
Additionally, we can help you enhance the accuracy of your home's value on websites such as Zillow by making adjustments that better reflect the upgrades and features of your property. If this process seems complicated, we can assist you in maximizing the presentation of your home's value on these sites, as buyers often rely on them.
By accurately determining the worth of your home and optimizing its presentation, you can increase your chances of maximizing your profit when selling. If you have any questions about how to determine the value of your property, call or email us. We’re always happy to help.