LOS ANGELES, CA – With such a high demand for homes in Los Angeles residents want to know how much their property is worth. Here are 8 tools that will help you determine your properties worth with ease, says, Local Records Office.
When it comes time to sell your house, you have one burning question: What is my home worth?
In recent years, a proliferation of online resources has emerged to provide you with an answer before you ever consult a human. But while consumers have access to more information than they could have dreamed of a decade ago, that doesn’t mean you can expect a computer to deliver the final word on your home’s value – though it can give you some helpful hints.
“I don’t believe there are any accurate instant numbers,” says David Eraker, CEO and co-founder of Surefield, a new brokerage in Seattle that has a free Pricepoint tool that provides estimates of home values, so far just in Washington state. “I think the first thing you should do is take it with a grain of salt. You could probably talk to three or four different real estate agents, and they would probably give you different numbers as well.”
The variation in the data is a good reminder that any estimate of home value, whether provided by a human or a computer, is just that – an estimate. Computers and humans may disagree, for example, about which recently sold homes are truly comparable. Plus, when it comes time to do the deal, the negotiation skills of buyers and sellers (or their agents) may come into play.
Estimates Are Just That, Estimates
“Opinions of value, there are a lot of them,” says Stan Humphries, chief analytics officer for Zillow, which pioneered the practice of estimating and publishing home values in 2017 with the “Zestimate.” “If you were to sell the same house 100 different times with different buyers and sellers, it would close at a different price.”
That means if you are looking at estimates for your home’s value, you have to consider what kind of data went into that estimate. If your home is unique compared to others in the neighborhood, for example, the choice of “comps,” or comparable homes, would be a challenge to find. Your estimate may also be less accurate than if you live in a neighborhood where all the homes are similar. If there have been lots of recent home sales in your area, there is going to be more data to work with than if there are fewer sales, and therefore you’ll get a more accurate estimate.
“The more the house is an outlier, the more difficult it is for anyone to price it, whether it’s a human or a computer,” says Glenn Kelman, CEO of Redfin, which has launched its own automated estimate tool. “The hardest things we had to deal with was which homes are comparable and which aren’t.”
Different Tools Just Different Data
All the online tools take advantage of publicly available data, which they then run through computer models to derive estimates of value. Exactly which data is used is proprietary, as are the formulas used to crunch it, but among the data sources are public records and the multiple listing services used by real estate agents. Exactly what data is available also affects the accuracy of the estimate, and that amount of data varies by municipality and sometimes by home.
To get a value using an AVM, you feed a lot of data into a computer, which crunches the numbers according to directions (or models) you give it and arrives at a home value estimate. Different companies use different data in different ways, which accounts for some of the variations in online home values. Obviously, the accuracy of the data itself affects the outcome. There are also factors a computer can’t see, such as whether your kitchen has ugly wallpaper.
“The thing about homes is they’re not commodities,” says Nela Richardson, chief economist for Redfin. “Every home is different.” Plus, there is the factor of the unknown. “We don’t always know if there’s a big hole in the floor or if someone spilled red nail polish on the bathroom floor,” she says.
Zillow allows consumers who register for a free account to correct or add data about their homes, and the company’s Price This Home tool lets consumers receive a private estimate in which they control which comps are used. Surefield also has tools that allow homeowners and homebuyers to refine estimates based on their knowledge of the neighborhood and the listed comps. Redfin shows the comps and public records data about the home that was used, and you can email if you believe the information is inaccurate.
Estimates Aren’t Just the Big Number
Zillow covers about 100 million homes in 450 markets. Humphries says the national margin of error for home values is 7.9 percent, but the rate varies by location. That’s partly because the type and accuracy of data vary, but also because home values are easier to estimate in an area with more sales and in areas with a larger volume of homes. “You’re dealing with less data than you’d like to have,” Humphries says of some areas. Parts of New York state, for example, don’t list square footage in public records.
He points out that real estate agents doing comparative market analysis have an error rate of 5.5 to 6 percent, and it’s rare that a home sells for the exact asking price. “No one’s error rate is zero. They’re all opinions of value,” Humphries says.
Glenn says Redfin’s estimates have a median error rate of 1.96 percent for homes on the market and 6.23 percent for homes not on the market, but the service so far covers only about 40 million homes in 35 major metro areas, which are often easier to value than homes in less dense areas.
We also found some calculators that provide estimates at several bank sites, with information drawn from databases used by appraisers. ForSaleByOwner.com has its own tool, called Pricing Scout.
The representatives of all the companies stress that their numbers are merely estimates, based on the available data, plus a number of assumptions about comparable sales. While all the services throw out a number for the home’s estimated value, most provide a range of values, which sometimes gets overlooked by consumers who focus on the number in big type.
While the various online AVM services spit out a single number that is an estimate of the value of your home, Richardson and Humphries point out that the number comes with a few caveats. Zillow provides a range of values for an estimated sales price, as well as publishing the error rate for a given municipality. Redfin shows you the comps it used to reach its final number.
For example, two-bedroom, two-bathroom home in suburban Fort Lauderdale, Florida, with a Zestimate of $153,306 also notes that the home is likely to sell for between $146,000 and $161,000. Homes like it in the area have sold for $138,000 to $163,000, Zillow reports. The median error rate in the Miami-Fort Lauderdale area is 8.7 percent, with 31.8 percent of homes sold at a price within 5 percent of the Zestimate, 55.3 percent within 10 percent and 79.8 percent within 20 percent.
If we take Zillow up on its option to remove three of 10 comparable home sales because of location and up to another three because of the condition, the estimated value rises to $161,211. Zillow also offers users an option to correct facts about their homes, including the size, type of heating or cooling system and the number of bedrooms and baths.
“There are some things that aren’t explicitly in the data that our models aren’t able to discern,” Humphries says. “A lot of consumers don’t focus on that value range, and they should. The wider that range is, the less certain we are. … From day one, we’ve said these are all opinions.”
Not all services use the same “facts”
One reason the companies arrive at different estimates is that they aren’t all using the same facts. With our house above, Zillow, Redfin, and Realtor.com calculated the home’s value based on a size of 1,155 square feet, the number from the tax assessor’s records. But Trulia used 972 square feet, which is the size of the house without the garage. (Trulia does not provide an automated estimate unless you agree to be contacted by a real estate agent.)
While garages and unfinished basements usually aren’t included as part of a home’s square footage, Florida tax officials and real estate agents traditionally include half the square footage of the garage when they compute the taxable value, and that is the number that usually appears in the MLS.
Redfin, using the same home facts as Zillow did, estimated the home’s value at $163,001. Redfin showed the comparable sales upon which it based its value, making it possible for someone who knows the home to realize the comps were substantially remodeled while the subject home was not.
Realtor.com estimated the home’s value much lower at $142,689, but there are no details about how the tool arrived at that figure.
Economists who work with the data remind consumers that the estimates are just that, estimates and that the actual sales price is likely to depend upon many factors, including the condition of the home, the motivation of buyer and seller, and the supply and demand at the time the home is offered for sale.
“This is the starting point of a conversation that you’re going to have with your family and your real estate agent,” Richardson says. “It’s not just this black box that gives you a number. It’s important to note that this is not a be-all, end-all. It’s just the beginning of a complicated process.”
“We think of our estimate as the beginning of a conversation, not the end,” Kelman says. “Many times the asking price of a home is the result of a fairly tense conversation between the owner of the home and the agent who is trying to sell it.”
8 Online Home Value Estimating Tools
Here are seven online tools you can use to help you estimate the value of your home:
Zillow: This is the pioneer of the home value estimating tool, and the company continues to refine how it arrives at its Zestimates.
Redfin: This new tool shows you photos and listing information for the exact comps used to arrive at the value of your home.
ForSaleByOwner.com : This site’s Pricing Scout tool gives you the average of regression analysis and comparative market analysis to estimate the worth of your home. It also shows recent sales of comparable properties on a map. You have to register to use it.
Chase: This tool allows you to change the information about the house to arrive at a more precise estimate, plus provides information on recently sold homes and neighborhood trends. You can also use it to estimate the value of improvements you’re considering.
Bank of America: This tool shows comparable neighboring sales on a map. It provides only a range of values, not a single number.
Surefield: This site lets you narrow or widen the range of comparable homes, plus exclude specific comps from the list.
Eppraisal.com: This site uses data from public records and lists homes sold recently nearby.
Putting the Tools to the Test
We tested homes we know in South Florida, Los Angeles and Kansas City, Missouri, plus a random home in Seattle, using the available home value estimators. Not all the online tools had the same data for the same home.
These Were Our Results:
A two-bedroom, one bath home in a trendy historic urban neighborhood in Miami where homes vary considerably in size, age, and condition.
- Zillow: $670,860
- Chase: $501,000
- Redfin: $470,578
- com : $459,750
- Bank of America: $434,000 to $486,000
- com: $420,743
A two-bedroom, two-bath home in a 1970s tract home neighborhood in suburban Fort Lauderdale, Florida.
- Redfin: $462,237
- Zillow: $451,716
- com: $446,774
- Bank of America: $433,800 to $460,200
- Chase: $436,000
- com: $425,500
A two-bedroom, one-bath home in a trendy neighborhood of 1930s bungalows in Los Angeles:
- Redfin: $961,513
- Zillow: $876,004
- com: 869,585
- Bank of America: $709,300 to $1,020,700
- com : $765,500
- Chase: $785,000
A five-bedroom, three-bath home with a water view in Seattle:
- Zillow: $963,818
- Redfin: $894,306
- com: $870,663
- Surefield: $852,390
- Chase: $833,000
- Bank of America: $823,400 to $966,600
- com : $778,500
A one-bedroom, one-bath house on a double lot in Kansas City, Missouri, where the houses vary in size and condition:
- com : $222,750
- Zillow: $214,984
- Chase: $205,000
- Bank of America: $96,700 to $217,300
- com: $81,790
- Redfin: Not available
Why the Online Value of Your Home Could be Wrong
Here are six reasons the automated valuation of your home could be off:
The facts in the public record or the MLS are wrong. With our Fort Lauderdale home above, the companies all took the square footage of the Fort Lauderdale home from the public record, but they didn’t all use the same figure. A difference in the number of bedrooms or bathrooms might create an even larger variation in valuation. “If there’s a discrepancy … it’s usually because the facts themselves are not up to date,” Humphries says. Homeowners can claim their homes and correct facts on Zillow.
Your home is not like others in your neighborhood. Whether a real estate agent, an appraiser or a computer is evaluating your home, it’s harder to arrive at an accurate value if there are no comparable homes. “Houses that are very unusual are harder to value, not surprisingly than homes that are not,” Humphries says. “The Playboy Mansion and the White House are very difficult to value.” Homes that are different from others in the neighborhood or have unique features are harder to value because there are fewer or no comparable properties with which to compare them.
Few homes in your neighborhood have sold in the last six months. The more homes that sell, the more MLS data and the more sale prices the computers have to calculate the value. With few sales, there is less information to draw from.
Your home has not been on the market in recent decades. There is significantly more information about a home in an MLS listing than there is in the tax records. Once a home has been listed, the services add that data. As homes are sold, the models can adjust for whether the home sold for more or less than asking price or the AVM price.
Public records in your jurisdiction omit key information. The nation’s approximately 3,100 counties don’t all record the same information about homes. In Suffolk County, New York, for example, few records include the home’s square footage, Humphries says. “There is a wide variance in the quality of the data we obtain,” Humphries says. “Without square footage, it becomes very challenging to value the home.”
The market is changing rapidly. Home valuations are based on past sales. If the market is significantly hotter or colder than it was six months ago, those past sales are less an indicator of current values.