Why Bank and Website Auto Valuations are a Bad Idea

Computers Don't Value Homes - They Can't Even Walk Through One

Picture this…

There’s an inexperienced real estate agent in your town.

He hasn’t sold any homes yet.

He wants to drum up some business.

So, he climbs up onto your roof and paints what he estimates to be the value of your home.

He feels like this could be a win-win:

YOU get to know the value of your house, so he was helpful to you, without even having to meet with him…

… and HE gets to show you how that he knows his stuff. Hopefully you’ll turn to him for help once you want to sell your home.

But you’re kind of ticked off, aren’t you?

First off, this guy painted on your roof. That’s just vandalism.

Beyond that, he wasn’t even close to accurate! The value he painted up there is tens of thousands of dollars off.

He didn’t even see inside your home

You notice he did the same thing to all the other houses in the area.

He seems off on the value of all of them.

It’s still kind of intriguing, thought, because you’re like, “Hmm, I always felt like Bill’s place was worth less than mine. Looks like I was right. But there’s no way Gary’s house is worth more than mine, that agent is craaaazy. Unless maybe Gary did some major remodeling inside…”

But how would the agent know? He never even went inside your neighbor’s house. Or your house. Or anyone else’s house.

He just eyeballed everyone’s house from outside, and took a quick peek at some data available to the public. Then slapped his estimate up on your roof for everyone to see.

His estimates are all over the place. Some high. Some low. Once in a while he seems to be somewhat in the ballpark.

His “value” affects your actual value

Beside the fact that this guy vandalized your roof, now you have people sizing up the value of your home based upon a number he came up with, without even seeing inside your home.

It was careless and thoughtless.

He lacked respect for your privacy, your equity, and ultimately your wealth. The value of your home can now be viewed by anyone, for whatever reason they feel.

It would be even worse if you were in the middle of trying to sell your home, and now you have buyers pulling up, seeing your painted roof, and considering his estimate when (and if) they make an offer.

Can you imagine if a real estate agent actually did this?!

You’d probably want to report him to the police, his real estate broker, the real estate commission…and all of your friends, family and neighbors.

You’d want everyone to know not to trust this guy, or give him any business.

Online valuation sites are basically doing this to you

You’ve probably seen or heard about websites where you can look up the value of your house (or anyone else’s house) for free.

It seems great because there’s no need to even talk to a real estate agent. Just pop in the address, and voila, you get to see the value of the home.

You might figure that it’s super accurate, since they use fancy algorithms and stuff.

However, these online real estate valuation sites are all basically painting a number on your roof, without ever having gone inside, and without ever having sold a house. And they’re definitely notexperts in your local market.

Unfortunately, there isn’t much you can do about it.

They’re using public data to come up with their estimates. They didn’t steal anything. They didn’t actually paint on your roof (they just hover a value over it digitally).

They post disclaimers about their accuracy (or lack thereof), at least if you really, really look for them.

Plus, who would you even report them to anyway?!

Start valuing real estate agents’ values

The thing is, these sites exist because people tend to like them, and look at them. They wouldn’t exist if people didn’t continue to click on them. But people do.

They certainly are convenient, and entertaining, even if they are not accurate.

Many people just don’t want to deal with real estate agents, until and unless they have to.
But that’s actually what you should be doing if you want an accurate value of your home.

Great real estate agents take a lot of time and pride in estimating the value of a home. This is not something you can do remotely, or just driven by public data and algorithms.

In order to be accurate, even a local real estate agent needs to see inside of your home.

So, instead of encouraging these online valuation sites to exist, by visiting their sites and clicking around…

…click on a local real estate agent’s site, and invite him or her in to take a look at your house, and come up with an accurate value.

Don’t rely on an online valuation.

And, whenever possible, spread the word about the inaccuracy of these online valuations because they can affect the perceived value of your home… and beyond. And they will exist as long as people continue to pay them any attention.

Pay attention to real estate agents instead.

Source: Lighter Side of Real Estate