Bonita Springs – Estero – Naples Real Estate Websites – Can Real Estate Websites Give Accurate Housing Values?

As seen in the News-Press June 5, 2010

By D. Michael Burke

I often talk about how important price is when listing a home or making an offer. A house that is listed too high, for instance, doesn’t get as many showings – and if your home isn’t showing, it isn’t going to get any offers, either. A competitive price, on the other hand, will generate lots of showings, and hopefully even several offers for you to choose from.

Likewise, an offer that isn’t well researched could either be too low, in which case the seller will reject it, or too high, meaning you’ll pay more than you should have. So knowing pricing trends in a particular neighborhood is important whether you are buying or selling.

My point is, as much bearing as price has on whether your house sells or your offer is accepted, it makes sense to ensure you are setting your price based on accurate information. There are several websites that offer free estimates, such as Zillow.com, CyberHomes.com, and of course Realtor.com. But how accurate are the values these sites provide?

The values given by all three sites vary widely, that much is obvious. One of the homes I have listed right now is estimated at dramatically different values by each of these sites. Zillow.com estimates the home’s value at just over $1 million, while Realtor.com just provides the average listing price in the area: a shockingly low $316,339! CyberHomes.com is in the middle with an estimate of $560,180, and a range of $504,162 to $644,207.

Zillow’s own article, "What is a Zestimate?" says that their estimates are only to be used as a "starting point" in assessing a property’s value:

"Your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. Variations in price also occur because of negotiating factors, closing costs, and timing of closing."

This is important because it indicates that these estimates are arrived at by comparing sales prices in a neighborhood, without regard to how the properties compare to one another. The article goes on to suggest several other things you need to do before arriving at an estimate of the home’s value, including a comparative market analysis (CMA).

The CMA is one of the primary tools I use for helping both buyers and sellers make decisions. When I do a CMA, I look at all of the houses that have sold in a specific neighborhood over the last six months, taking note of special features and other factors that may have influenced the price. By doing so, I can not only arrive at an average price per square foot in the neighborhood, but also identify whether there have been any trends in prices over time – whether they are going up, down, or staying the same, and what features trigger a higher sales price.

Having your real estate agent perform a CMA gives you a much more accurate idea of the value of a home than any of these online real estate estimates. Remember that example I gave up above, of how wildly the estimates varied? After looking at the results of the CMA, the seller and I set the listing price at $699,000. Just think of the ramifications if the seller had gone by the online estimates, rather than having a professional CMA done: If they’d used Zillow.com, for instance, they would have had the house priced far too high, and it wouldn’t have sold at that amount. If they had used CyberHomes.com, on the other hand, they would have sold themselves short and not gotten the full value of their home. Realtor.com’s value is hardly even worth mentioning, it’s so far off – the seller never could have afforded to sell it for that amount!

Although sites like Zillow.com might advertise their online estimates as a good starting place, I think they are more misleading than anything. As I like to tell my clients, if you want to know the local weather, who are you going to trust to give you an accurate forecast – national weathermen, or the local guys who live here themselves? If you follow the national forecast, you might find yourself dressed for the wrong kind of weather. Likewise, if you go with these online estimates, generated by computers instead of professionals who know the neighborhoods, you might find your home priced completely wrong for the local market.

So rather than advising you to take online estimates with a grain of salt, I think it is better to skip them entirely. Your real estate agent can give you a much better picture of what your home is worth, or how much to offer on a home you want to buy. To discover your home’s value, or to discuss how a CMA can help you buy as well as sell a home, feel free to call me anytime!

D. Michael Burke, P.A. Keller Williams Elite Realty
Michael@CoconutPointRealEstate.com / www.CoconutPointRealEstate.com