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2019 Idaho Real Estate Blog

The Acceptance of Home Value Inaccuracy Main Idaho Real Estate Insights

What is any home in Boise worth right now? It’s generally worth “market value”, defined loosely as the highest price a buyer would pay in a competitive market. This assumes neither buyer nor seller are under any undue stress or duress external to the transaction itself. Undue stress would include something like the buyer and seller are related.

What's Your Home Worth is Boise Idaho?

Most homeowners want to know their home's value even when not interested in selling it. Sometimes people want to protest the assessed property value or maybe you are just curious as to your current Net Worth?

If you don’t want the “market” to determine your home value, because you don’t want to sell, there are a plethora of automated home valuation tools and websites that will help you guess the supposed value of your home based on mathematical algorithms and data. The most well know is perhaps the Zestimate on Zillow. Did you know that the owner of Zillow sold his home for  less than what his Zestimate was? As a matter of fact it was 40% off, $700,000!

Why is it difficult to determine what a home is worth?

In Idaho, sold prices are not disclosed. All of these websites that present a 'home valuation' are not able to use real data on sold home prices which is the only way to determine market value. They can only look at existing homes for sale and use an algorythm to produce their valuationa and this can vary greatly between sites. Again, they do not have access to real time sold data. They are not seeing if homes are selling above or below asking price.

Home Valuing websites do not understand that an overpriced home will not sell in this era of saavy buyers who have access to many resources and quickly determine that one home is not priced correctly. At the very minimum, an agent can asses a home by looking at what sales are pending and solds. They can look at how similar homes are and compare. They have the ability to add and subtract for differences in size of homes, age, acreage/ lot size, how well a home has been maintained and if the decor is current or outdated. All of these factors will change the value of one home to the next. A computer may have a hard time determining if the roof will need to be replaced or if the decor is outdated.

In one home that was researched, these were the results:

$502,091 Redfin
$499,533 Homes.com
$473,852 ePropertyWatch (CoreLogic Tool)
$461,000 USAA Home Value Monitoring
$411,000 HomeSnap
$407,038 Zillow
$405,181 Trulia

So what is this home worth? Notice the $50K gap between the top 4 and the bottom 4? And the nearly $100K gap between the highest and lowest? These numbers are all over the map. Each source boasts of it’s accuracy as being the “best”. Oddly, if we add them up and divide by 8, it comes out to about $445K, which is pretty close to the valuation that was actually provided to the client.

Are we smarter than computers? NO. But theses algorithm producing valuations do not have the most relevant data to start with.

People seemingly don’t care that the Zestimate is wrong. They know it is wrong, but remain interested in knowing what the “wrong” number is. Why is that? Has there been a shift away from expecting accuracy of information and precision in our social mindset and movement toward acceptance of that which is known to be inaccurate? Or maybe these websites just provide real estate entertainment?

Don't forget these home valuation portals want to sell ads so producing wrong data may not be importatnt to them since they are not selling the provided valuation. Consumer real estate search sites are certainly not places to go to find true, correct and accurate information about housing values, yet they dominate search traffic and site visits in the real estate space because people “like” the websites and apps and the way information is presented. There are no rules for real estate portals such as Zillow and Trulia. They can do with you as they please, manipulate the data however they want, and there is no accountability structure in place at all.

Try our human generated house valuation service.

Boise Idaho Home Valuation Service
Trey Langford
208.724.9636

 
Posted by tlangford at 2/24/2019 8:38:00 PM
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