There are many automated valuation tools available online nowadays. Sites such as Zillow.com, Trulia.com and Realtor.com have become ever popular with homeowner’s looking to obtain a quick valuation of their home or a prospective home. However, there is a dark side to the automatic valuation, some things that you should know before putting too much faith in the results.
No Personal Inspection
Automated valuation sites use assessor and public records to determine the characteristics of a home. The major problem with this is that these records are often times outdated and downright inaccurate. Who knows, the home could have been recently damaged in a major fire and be a mere shell. These online assessment tools will spit out an estimated value based on the information they have, but values based on false information are completely useless.
As any experienced Appraiser knows, looking at the room count and GLA of a property is far from sufficient in determining if a comparable is indeed comparable to the subject. An abundance, or lack of, updating and remodeling, external hardscaping, location and views all influence the overall value of a property. When too many of these items differ from the subject, the comparable becomes less and less ideal. Computer models have no way of determining all of these things from assessor records alone.
Increasing / Decreasing Markets
Most computer models determine values based on recent sales of nearby property that it determines to be comparable to the subject. As we stated above, the computer models aren’t necessarily good at determining what is exactly comparable. A quick succession of higher end sales within a market may trick the computer into thinking that the market is increasing when in reality, the sales are just of a much superior quality to the subject. Conversely, a rapid succession of distressed or bank owned sales may trick the system into thinking that the overall market is declining.
Lack of the Human Element
No matter how sophisticated a computer model may be, it will never replace the human element involved. The human brain is the most complex computing system known to man and until our computers can match the reasoning and intuition of the human brain, they will always fall behind. To rely solely on computers is to remove the human element from home evaluation. Don’t forget that real estate is more then a calculation of the parts, there is an emotional element involved that a computer system just cannot understand.