Prospective homebuyers often check national brokerages online for information. It’s logical to see houses for sale with list prices. But what about the ones that are not for sale? We all look at them, as almost every house has an estimated value. But it would be good to know why the ‘what-they’re-worth’ prices listed should be taken with more than just a grain of salt.
Here are four reasons why you shouldn’t put too much stock in national website not-for-sale house-price estimates.
They are computer-generated
The estimated price of a not-for-sale house is based on an algorithm and generic data. Important information like local market conditions, current mortgage, inflation and employment rates and more, are not included. AVMs (automated valuation models) also don’t take into account details of the home.
They won’t reflect a property’s current condition
Homeowners may make improvements like kitchen or bathroom remodels that would lead to a higher property value than what is shown. Or there could be something like neglected maintenance or structural issues that dramatically lowers the value presented.
The neighborhood factor is iffy
When generating an estimate, the algorithm uses the surrounding area as part of the equation. But the same radius in miles for all houses will usually result in very inaccurate results because neighborhoods (and prices) can change from block to block, which only local expert REALTORSⓡ would know.
They are likely outdated
There is usually a disclaimer that the websites admit they’re likely off base. One such disclaimer states: ‘The estimate is based on what we currently know about this home and nearby market. It is not a formal appraisal or substitute for the in-person expertise of a real estate agent or professional appraiser.’