HOW TO DETERMINE HOME
VALUE?

• Low Accuracy and Precision: Online Appraisal Calculators: Like Zestimate, Redfin, Realtor ect. Do not have permission from the local MLS to disclose or use the final sales price in estimates, so they go on county, tax, and public data and private formulas, which are not as accurate as the full MLS data and appraiser will use. They also vary greatly from website to website, low precision.

  • Zillow's "Zestimate" is probably the most widely known online home value estimator. They all follow the same pattern. Zillow claims to be 7.5% of the homes actual sold value. Independent data shows a much wider range closer to 20%. Property owners can also request a zestimate review-making it more biased and subject to homeowner opinion.​

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• • We would not trust a company estimating the value of your home who laid off 25% of their company in 2021 and reported 422 million in losses when the CEO Rich Barton said the reason for the layoffs was "Zillow’s ultimate failure was its inability to predict housing prices accurately."

• Moderately Accurate, Low Precision Broker Opinion of value: Also called a "Market Analysis". Realtors have access to the same database an appraiser will use to use for comparable sales. They try to mimic which comps and values an appraiser will use. In theory they should be moderately precise as well- but not all realtors are trained or know how to do an accurate market analysis so the precision varies greatly. 

  • There is no exact formula that guides Realtors on how to give you an opinion of value. It is more accurate than online calculators IF you have an experienced agent doing one since they have access to the home data system an appraiser will use. We would take these with a grain of salt. These are free- so if selling a home I would get three BOV's and compare, if they are all close, that is probably an accurate representation. Keep in mind, most realtors know that if you are selling a home-- typically the person with the highest BOV get to sell the home, so some realtors may inflate that value to earn your business -- whereas it may not actually sell for that.​

• Highly Accurate, Precision varies. Third Party Appraisal: An appraiser who is randomly chosen by an appraisal management company who has no interest or ties to the seller, bank, or buyer. Looks at comparable sales within the last year in a certain mile radius posted on a local multiple listing service (MLS). Can use the cost, comparable, or replacement method of appraisal. Most appraisals use the comparison approach. Very subjective- no standard "values" set for bedrooms, baths ect. A bank will not give a loan for any more than the appraised value- down payment. So if contract value is more than appraised value either need to renegotiate down or pay difference in cash.

  • Unfortunately you would think there would be less variability between appraisers. This is not the case. We listed a home for 300,000 back in 2018 and we were under contract for 300,000. That contract's appraisal came in at 260,000. The sellers opted to relist and that same day got an offer for 320,000. Three days later, with no updates to the home, a different appraiser came in and appraised it for 320,000. $60,000 difference of opinion on the same home within 1 week of each appraiser completing the report. That is a 20% variability in from two different appraisers on the home value. When my clients ask what a home should appraise for our response is always " Appraisals are like Russian Roulette- just hope your appraiser is in a good mood that day!"​

• Highly Accurate and Precise Fully executed purchase contract: "The worth of a home is what someone is willing to pay for it". At the end of the day, Regardless of what online calculators, zillow, or an appraiser says this number is what the true worth of the home is, even if it is above or below what all the other sources say.

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