Why you should be careful using online resources to gauge a home’s value
- It’s a great idea to use online resources as a guide, but do not strictly follow what you find online—it's not always accurate
- View several properties yourself and come up with your own conclusion on the values
Before making an offer on a home, it’s a good idea to research the values of other homes in the area to try and get a feel of market conditions. However, there are a few things you should keep in mind:
Online estimates found on Zillow, Trulia and Realtor.com also include non-market sales. These are transactions such as bankruptcies, foreclosures and private transfers, which are not accurate reflections of true market prices.
Websites can be inaccurate
Resources such as Zillow, Trulia and Realtor.com can be amazing tools. However, these websites use computer systems that are designed to pull data from different, sometimes conflicting, sources automatically. As a result, they can miss important nuances in the market. A home's online value estimate is also more likely to be off in these situations:
If the home is very old
Zillow, Trulia and the like use public records as one of their data sources. Older homes are more susceptible to having incorrect information fed to websites because the older the home, the higher the possibility that that errors in public records could impact its online value estimate.
If the home borders a drastically different neighborhood
Sometimes, data-pulling algorithms use close geographical distance as a criterion to determine appropriate comparable homes. However, just because a home is close to another, doesn't mean the homes are comparable when it comes to home value, especially if the home is near a very different neighborhood.
If homes in the area don't sell often
Naturally, when algorithms don't have much data in the form of transaction history to work with, they can produce significantly off-base values.
If you do come across a home you like online, Home Savi can help you finally bridge the gap and submit an offer online as well.
Photo credit: Michael Theis