Everything is online now. Personally, I don’t even own a phone book anymore. If I need to locate a phone number, or a service provider, I just search the Web.
The Web has now become a popular way to get the value of a home. There are sites out there where you can enter some basic info about your home and get an email with what the site owners present as your home value. But there is a problem. Two problems actually.
The first problem is one of accuracy. The best example I can give of this is an area here in Raleigh we call Inside The Beltline. Many of the homes in the neighborhoods in this area of Raleigh were built in the early 1900s. Some have been remodeled and some have been demolished and a new home built in its place. The demolished one is what we call a tear down.
Tear downs create much confusion for automated online home value services. I found a recent example where a home was purchased for $350,000, it was demolished, and a brand new $1.5 million home was built in its place. Automated home value companies look at the address and see a sale at $350,000 and another sale, of what the software mistakenly thinks is the same home, for $1.5 million just 12 months later.
As this happens over and over again Inside The Beltline, and in other neighborhoods in the Raleigh real estate market, these huge erroneous jumps in home values begin to get distributed across other homes in the neighborhoods. An online home value company can easily, and mistakenly, have a $350,000 home valued at $800,000 plus.
Then I get the phone call from the home owner anxious to cash in on their huge profit. And I am stuck with the hard task of telling them the truth. I show up with the facts and the local market knowledge about how the new $1.5 million homes that were tear downs have helped the value of their home, but not by a factor of more than two.
I said there were two problems. The second is that the online home value companies get your contact info and then turn around and sell that information to a real estate agent as a lead. That’s right, they sell your information. You didn’t think they were going to build such a huge, automated system out of the goodness of their heart, did you?
The next time you run across one of these sites on the internet, beware. You have been officially warned.
By the way, I have a similar, but different, offer on all of my web sites. A button you can click to get the value of your home emailed to you. But there is one big difference. I have actually seen your neighborhood. I sell homes there. I know where the tear downs are and I know the locations that add value and the ones that don’t. I know the effect the nearby train tracks have on your home versus the effect being near the creek and the nice little wooded area can have on your home. And I will tell you the truth.
Oh yeah. And maybe best of all, I won’t sell your personal information to anyone either.
{ 2 comments… read them below or add one }
Great article Bob. Most home value sites will admit that their equations should be taken too seriously, but that seems to be lost on many consumers that “don’t want to be bothered” by real estate agents. Agents obviously live and breathe their local markets and know what’s going on there – a computer doesn’t. Thanks for pointing this out for everyone in Raleigh.
Bob,
I’m in agreement with you on flaws in automatic evaluation of any property and especially for redevelopment. We have to argue all the time with homeowners who have an unrealistic Zillow estimate when they talk listing price to us. I invite you to republish your article on our blog teardownpost.com that is dedicated to redevelopment property. This information would be very valuable to our readers.
Thanks.