Automated valuation platforms such as Zillow, Corelogic and others, are increasingly being relied upon by Loan Officers counseling sellers on re-fi's, Lien holders weighing the pros and cons of granting a short sale, and sellers with a white-knuckled grip on equity which has been slowly seeping through the fingers of their clenched fists for the last 4 years.
Here is a description of the AVM model from Fannie Mae's website:
AVMs are statistically-based computer programs that use real estate information such as comparable sales, property characteristics, tax assessments, and price trends to provide an estimate of value for a specific property
On one hand, I get it.
The technology is there, the numbers are what they are, and some computer, somewhere, can calculate a "value" far more quickly than a BPO or Market Analysis from a local real estate professional experienced in the area can generate.
Yeah, but on the other hand...
Does a computer smell cat urine in all quadrants of the house? See the nicotine stains lining the walls from years of Cigarette smoke? Take into account the three vehicles (all apparently inoperable) parked in the front yard on the grass?
The list of factors which must be considered when accurately offering a current market value of a property, is far more comprehensive and frankly, more personal, than any computer could ever include.
LOCATION: More than City, State and Zip (All data for the processor), how about factors such as school boundary desirability, backing to a busy street (vs. not), being located under High Tension Power Lines?
Do the robots computers take these calculate these variables?
I know I do.
I know buyers do too.
CONDITION: Seems to be a no-brainer, but if the AVM program is comparing one home in a neighborhood to say, three others that are comparable in terms of BR # and square footage, but otherwise have no similarities, is that an accurate reflection of value?
Or is there is more to property valuation than square footage and lot size?
I think an apple and a pear might weigh the same, take up the same amount of space (even fall into the same fruit category), but they certainly are shaped differently, appeal to different tastes and are priced differently. Does the shape, smell, color and quality of a house matter to a robot computer? It does to me.
And I know it does to buyers too.
BEAUTY: Yes, I said it. Like all those shiny, sparkly, pretty people in a bar, it's the "outside" aesthetic which usually garners the most attention. I doubt an AVM makes value concessions to the "parked out" flat one acre lot vs. the house on an acre which is predominately wetlands, covered in blackberries and unusable land due to septic and well covenants...but I do.
And I know buyers do too.
I could go on and, and in fact, will gladly continue this debate if you're interested in contacting me to contine the discussion.
I'm not saying robots AVM models don't have their place in the industry. I'm just worried they are being given a bit more credence than they deserve.
And frankly....they aren't as good at it as moi.
Just sayin'
PS: If you're in the greater Seattle Area and would like a more personalized AVM based on Human assessments (do computers buy houses?) feel free to request an online analysis here. Or you're welcome to call me for a real life, personalized evaluation of your property's value anytime 425.432.5400
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Colleen Fischesser is the Designated Broker and Owner of RE/MAX Select Real Estate. She has been successfully helping clients buy and sell real estate in the greater Seattle Washington area since 1990 and specializes in South East King County including the communities of Covington, Renton, Auburn, Kent, Ravensdale, Black Diamond & Maple Valley. Voted by clients and industry professionals as one of Seattle Magazine's 5 Star, Best in Client Satisfaction for sevenyears running, she and her team rank in the top 50 of RE/MAX teams in the entire Northwest region. Colleen is committed to remaining on the cutting edge of real estate marketing and technology while providing value-added, personalized service.
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It is hard to get buyers to go against them no matter what you say. I hate them.
So true, so true. Unfortunately, this happens with BPO agents in addition to AVMs. Zillow has a rough estimate of their percentage of reliability posted on their site. But it's well buried, Stick to the charts and graphs. Sellers love them and they're a sure-fire way of disputing the Zillows out there.
It's ridiculous to even think a computer could do a market analysis. It simply cannot see the variables you mentioned - or any of the dozens of others.
I got into a verbal battle with one of our County assessors over this - he tried to tell me that our County uses market value - and then proceeded to say that two homes with the same square footage had the same value, regardless of how they were finished.
I said "So a house with plywood floors and linoleum counter tops is valued the same as one with $100 per yard carpet and marble counter tops?" He said YES. What an idiot.
There is a place and time for everything. . I use Zillow to make a point in my presentations backing it up with real data and people are shocked at the discrepancy.
Colleen,
I look at them because I know consumers do. However, I completely agree that the valuations are at best a guide. There is more there - one of my favorite quotes is "the devil is in the details". We have the same floorplans in our neighborhood - that have basements, don't have basements, back up to a busy road, back up to the woods, have had kitchens and baths remodeled and NOT. The sophisticated Buckhead buyers do note those things and pay or buy accordingly.
All the best, Michelle
Colleen, this is an excellent post for consumers... I hope they find it and begin to understand that somethings just have to be done the old fashioned way - by a human!
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