2 of my favorite quotes from the comics; “Good Grief!” is Charlie Brown of Peanuts fame favorite saying. “We has met the enemy and he is us” is from an old comic strip called “Pogo”. Pogo was a cartoon opossum and the originator of that saying.
There has been a lot of noise on the net lately about automated home valuation models along with an increase of websites offering them to both buyers and sellers of real estate.
Unfortunately for those that put a lot of stock in these online appraisals they’re generally overly broad and very, very often not valid for today’s prices in a given neighborhood.
I had a buyer recently I had been sending e mails of listings that nominally met his buying criteria. One day he called and wanted to go look at 3 houses he said he was interested in.
We went and one turned out to be his proverbial dream house. Went back to the office to write an offer and he pulled out not one, not two, but three online valuations of his 3 favorite houses including the one we were fixing to write an offer on.
I’ve never seen such a disjointed batch of alleged comparable sales in my real estate career. Just because a house has the same number of square feet as another or happens in be in close proximity, that has nothing to do with the value of either house.
Some of them had used a condo complex just down the street to compare to a single family home in a neighborhood, others were wildly out of the ballpark both ways on suggested values.
After we sat down and went on the MLS (Multiple Listing Service) to find some valid comparables along with some knowledge I had of those sales, we wrote a successful offer.
The huge flaw with most of these services is that they just pull sales from databases and the programmers have no clue as to where they’ve told it to look.
They also don’t (and can’t) factor in nuances we would likely be aware of like sellers paying closing costs for a buyer, redecorating-done or not, property size, and a host of other very important variables.
There’s way too many of these so called “instant appraisal” services running around out there leading both buyers and sellers off in the wrong direction about the value of houses for sale.
We need to go a much better job of educating the public and our buyers and sellers about the flaws and limitations of these online valuation guys or we’ll be dealing with stuff like this on every sale.
Somehow I don’t have high hopes of that happening.
“We has met the enemy and he is us.”